A Chapter 11 case can turn on one question almost immediately: how will the business keep operating while the bankruptcy is pending? Payroll, rent, inventory, insurance, utilities, critical vendors, and tax obligations do not pause just because a petition was filed. In many cases, the company’s cash is already tied up in a lender’s collateral package, or new money is needed before the reorganization has time to take shape.
That is where cash collateral and DIP financing come in. If you want a broader primer on how these tools work and why they matter so much in the first days of a case, it may help to start with this overview of emergency bankruptcy funding and operating survival.
In this post you’ll learn how to prepare a cash collateral or debtor-in-possession financing request in Chapter 11, what courts typically look for, what documents usually matter most, and where debtors and lenders often run into trouble.
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Under Chapter 11, a debtor often remains in possession of the business and continues operating, but access to cash is not automatic. The Bankruptcy Code treats cash collateral and postpetition credit differently, and each path comes with its own statutory requirements.
Under 11 U.S.C. § 363, a debtor generally may not use cash collateral unless the secured creditor consents or the court authorizes the use after notice and a hearing. Under 11 U.S.C. § 364, a debtor may seek unsecured or secured postpetition credit, and in some circumstances the court may authorize superpriority claims or priming liens when less burdensome financing is unavailable. Those two sections form the legal backbone for most emergency liquidity motions in Chapter 11.
This timing pressure is not theoretical. The federal judiciary reported that total bankruptcy filings rose 11% in the twelve-month period ending December 31, 2025, and business filings also increased, which is one reason early-case financing issues continue to receive close attention from courts, lenders, and turnaround professionals alike. See the latest data from the U.S. Courts and the more detailed Judicial Business 2025 report.
The first drafting question is basic but important: what relief is actually being requested?
Cash collateral usually refers to cash, deposit accounts, receivables, and proceeds in which a secured creditor claims an interest. If the business is collecting receivables that are subject to a lender’s lien, that incoming money may qualify as cash collateral under Section 363(a) and (c).
A cash collateral motion commonly asks the court to authorize: