In re Cafeteria Operators, L.P.
United States Bankruptcy Court for the Northern District of Texas
299 B.R. 400 (2003)
Restaurant chain Cafeteria Operators (plaintiff/debtor) had granted a group of secured lenders (Bank Group) (defendants) a security interest in its fixtures, equipment, and food and beverage inventory. After filing Chapter 11, Cafeteria moved to use cash collateral to continue operating, arguing through its chief restructuring officer that post-petition cash was generated by employee labor and therefore wasn't "proceeds" of the pre-petition inventory in which Bank Group held a security interest.
Whether, under the Bankruptcy Code, after-acquired property is subject to pre-petition liens when a creditor holds a security interest in proceeds derived from pre-petition property.