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May a Chapter 11 debtor continue to use its property?

While the debtor in possession generally cedes authority over its assets to the trustee, the debtor may still use, lease or sell many of its assets in the ordinary course of its business without first getting the court’s permission to do so. The court, however, may limit that authority in cases in which there is a particular risk of the debtor depleting the bankruptcy estate. If the debtor wishes to use, lease or sell its assets outside of the ordinary course of its business, it must first get the court’s permission to do so. The debtor must also get court approval to spend “cash collateral.”

Barry Rosenzweig
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Barry Rosenzweig, has 25 years experience as an attorney helping clients solve their legal problems.