Cash Collateral

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DEFINITION of 'Cash Collateral '

Cash collected when liquid assets are sold during Chapter 11 bankruptcy proceedings. This can be obtained through the sale of cash equivalent securities or through the sale of personal property against which debt may be secured.

INVESTOPEDIA EXPLAINS 'Cash Collateral '

Cash collateral is only an issue for corporate bankruptcy proceedings. When a creditor has an interest in a company's proceeds (such as a bondholder), the cash generated when these proceeds are sold is considered cash collateral and therefore can't be used by the debtor without the creditor's consent or by court order.

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