adequate protection definition
The Bankruptcy Code. references and requires the provision of adequate protection in several circumstances including. stay relief, use of a secured creditor’s collateral and when the debtor proposes to prime a secured. creditor’s lien on collateral with an additional lien. These payments are related to the general bankruptcy concept of adequate protection. The general concept is that secured creditors are entitled some degree of assurance that the bankruptcy process does not diminish the extent their loan or claim is secured by collateral. Adequate protection payments are an aspect of chapter 13 disbursements that don't often matter when it comes to the big-picture decisions about chapter 13 bankruptcy relief. Legal Definition of adequate protection. : such action as is judicially determined to protect a secured creditor's interest in property that is part of a bankrupt estate. The U.S. Bankruptcy Code offers a list of examples of actions that are predetermined to provide adequate protection. When a court finds that a secured creditor is not adequately protected, the creditor may obtain relief from the automatic stay from creditors' collection attempts that is effected by the debtor's filing for bankruptcy. Seen and Heard. 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. Answers.com® is making the world better one answer at a time. The moment a petition, either voluntary or involuntary, is file for bankruptcy, an automatic stay, or suspension, of virtually all actions by creditors against the debtor of the debtor's property normally goes into effect. A secured creditor or other party in interest, however, may petition the bankruptcy court for relief from the automatic stay. The adequate protection doctorine, protects secured creditors from losing their security as a result of the automatic stay. property without compensation despite a public purpose for the taking.4 Adequate protection, however, is more than a constitutional protection of creditor’s interest in property; §361 of the. Bankruptcy Code, and the concept of adequate protection generally, is based as much on policy. grounds as on constitutional grounds.5 As Congress explained. 1 Timothy M. Lupinacci is the managing shareholder of the Birmingham office of Baker, Donelson, Bearman, Basically, adequate protection payments are disbursements made by the chapter 13 trustee from funds the debtor as paid to the trustee, which are directed towards holders of certain secured claims on personal property (e.g. a car loan, but not a credit card or a mortgage).
Such action as is judicially determined to protect a secured creditor's interest in property that is part of a bankrupt estate.