It’s Called 'Adequate' — Not 'Automatic' — Protection

Law360, New York (September 13, 2013, 10:30 AM EDT) -- Adequate protection compensates secured creditors for the debtor’s use of their collateral in bankruptcy. This protection is not automatic and a recent decision by the Bankruptcy Appellate Panel of the Eighth Circuit underscores the importance of affirmatively asking for adequate protection or forfeiting a possessory security interest in funds turned over to the debtor.

In In re WEB2B Payment Solutions Inc., 488 B.R. 387 (8th Cir. B.A.P. 2013), the Appellate Panel held that the creditor lost its possessory lien in certain funds when it turned them...
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