In re McCOMBS PROPERTIES VI, LTD., a California limited partnership, Debtor. McCOMBS PROPERTIES VI, LTD., a California limited partnership, Movant v. FIRST TEXAS SAVINGS ASSOCIATION Respondent, 88 B.R. 261

Summary

Creditor opposed debtor's request to use cash collateral primarily because its interest in the cash collateral was not adequately protected. Debtor argued that if the rental income were cash collateral, creditor was adequately protected by the equity cushion in the property. The court held that creditor's filing of a perfection notice under 11 U.S.C.S. § 546(b) perfected its security interest in the rental income. Debtor asserted that the transaction could be set aside under 11 U.S.C.S. § 547 as a preferential transfer. The court stated that the preference allegation had to be brought as an adversary proceeding under the bankruptcy rules. Regarding the issue of adequate protection, the court held it had a duty to adequately protect the value of the collateral under 11 U.S.C.S. §§ 362 and 363 and that an equity cushion could serve as the basis for adequate protection. However, creditors only had the right to look to the collateral for payment of their claims upon completion of the ...