Adequate Protection Payments

Adequate Protection Payments are financial assurances made during bankruptcy proceedings to protect the interests of secured creditors. When a business continues operating under Chapter 11 bankruptcy, it can use certain assets that creditors have a claim on. To maintain fairness, the court may require the debtor to make regular payments to creditors, ensuring their investment and collateral remain secure. This helps prevent creditors from losing value and supports the debtor's efforts to reorganize and eventually pay off debts. Essentially, it's a way to balance the needs of the debtor and the rights of creditors during a challenging financial process.