Cash collateral

Cash collateral,

Definition of Cash collateral:

  1. Collateral in the normal sense is property pledged to secure a loan; the lender then has a lien on that property. For example, a buyer secures a mortgage loan from a bank using their house as collateral.

  2. Cash collateral is cash and equivalents collected and held for the benefit of creditors during Chapter 11 bankruptcy proceedings. Cash and cash equivalents include negotiable instruments, documents of title, securities, and deposit accounts. Unless a court orders otherwise, cash collateral is separated from other assets for the purposes of paying creditors.

  3. Certificates of deposit (CDs), gilt edged securities, negotiable instruments, etc., that are accepted readily as collateral by lenders because of their very high degree of convertibility into cash (liquidity) and little or no risk.

How to use Cash collateral in a sentence?

  1. Cash and cash equivalents include negotiable instruments, documents of title, securities, and deposit accounts.
  2. As assets are sold off during bankruptcy, the cash is placed in a cash collateral account, separate from other assets.
  3. Cash collateral is cash and equivalents held for the benefit of creditors during Chapter 11 bankruptcy proceedings.

Meaning of Cash collateral & Cash collateral Definition