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Cash Collateral agreements needed in business Chap. 13: In re Kjoller

In re Kjoller (07-23133) (Decision November 10, 2008; Judge Ninfo): Bankruptcy Code section 1304 and Section 363(c)(2) and (4) makes a Chapter 13 business debtor a trustee of an explicit statutory trust covering cash collateral. These sections require a business debtor to get the consent of any cash collateral secured party or Court order allowing the debtor to use any cash collateral, including receivables or sale revenue, or to put the cash collateral in a separate account and account for it to the secured creditor. Court expects in future chapter 13 cases the debtor and the trustee will address any possible tax collateral issue at the earliest opportunity. In this case, the bank filed a motion to dismiss the case for the debtor's alleged "embezzlement" or "defalcation" of cash collateral. The court dismissed the embezzlement complaint, and allowed the defalcation claim to continue. The case also includes extensive notes about motions to dismiss complaints and amendments to complaints.

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