Cash Collateral—An Illusion Or A Reality?

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A recent bankruptcy court decision highlights critical lessons for secured creditors about the difference between having access to cash collateral and actually holding it as security. The case demonstrates how inadequate documentation and commingling of funds can result in the complete loss of a substantial secured claim, even when the creditor believed it had proper protections in place.

United States Insolvency/Bankruptcy/Re-Structuring

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Partners Barbara Goodstein and Adam Wolk, examine a recent bankruptcy court decision that serves as a powerful reminder for secured creditors: holding cash collateral requires more than good intentions — it demands actual control, proper documentation, and continuous tracking. In In re Servicom, LLC, the court denied a creditor's $1.4 million claim after finding the cash had been spent and commingled, reinforcing that the ability to access funds is not the same as holding them as security.

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Cash Collateral—An Illusion Or A Reality?

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Insolvency/Bankruptcy/Re-Structuring

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United States