Cash Collateral (Bankruptcy) Law and Legal Definition
Cash collateral refers to collateral consisting of cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents. It includes any negotiable assets that may be converted into liquid assets if necessary. In bankruptcy proceedings cash collateral is important for presenting an accurate picture of the financial condition related to the action. Depending on the type of bankruptcy that is being filed, conversion of assets into cash may be required. This cash collateral is then used to discharge part of the outstanding indebtedness, leaving the court to address the disposition of any remaining credit balance.
