Treatment of Pre-petition Liens in Post-petition Property under Section 552

Summary

This practice note discusses how a pre-petition lien in post-petition property is treated in a bankruptcy case. Many security agreements include, among other things, a clause that grants the lender a security interest in property acquired after the effective date of the agreement. Despite such clauses, most property acquired by a debtor after a bankruptcy case is commenced (post-petition) will not be encumbered by any agreements entered into by a debtor before a case was commenced (pre-petition) except for certain types of collateral and proceeds.