Adequate Protection [Bankruptcy] Law and Legal Definition

Adequate protection under bankruptcy refers to relief created to protect the value of a secured creditor’s lien so that it does not diminish during the bankruptcy proceeding. The relief can be in the form of periodic payments, interest payments, or a replacement lien on other property. It is the discretion of the court to declare a relief as adequate.

The following is an example of a federal law on adequate protection;

An under secured creditor may be entitled to adequate protection to ensure against the decline in value of its collateral. Where there is the possibility of a diminution of a creditor's collateral interest, a debtor may be required to provide the creditor with adequate protection, such as periodic cash payments. [11 USCS § 361].