Adequate Protection

Adequate protection refers to a legal concept, primarily in bankruptcy cases, where a secured creditor's interests are safeguarded. If a debtor seeks to keep or use collateral (like property or equipment) during bankruptcy, the court ensures the creditor’s rights are protected. This can involve allowing the creditor to receive payments, securing additional collateral, or other arrangements that guarantee their loan remains covered, even if the debtor's situation changes. Essentially, it's about balancing the needs of debtors with the rights of creditors, ensuring neither party is unfairly harmed during financial restructuring.