In re LTV Steel Co.
United States Bankruptcy Court for the Northern District of Ohio
274 B.R. 278 (2001)
LTV Steel Co. (LTV) entered an asset-based securitization arrangement with lender Abbey National (Abbey) (plaintiff), creating a subsidiary that purportedly purchased LTV's accounts receivable, with Abbey then lending money to that subsidiary secured by those receivables; after LTV filed bankruptcy and sought court permission to use the receivables as cash collateral (arguing it would otherwise be forced to shut down, idling thousands of workers), the bankruptcy court granted that motion based on LTV's showing of adequate equity cushion. Abbey sought modification, arguing there was no basis to treat the receivables as part of LTV's estate and that its own interests weren't adequately protected given the receivables' rapid diminishment.
Whether a secured creditor is entitled to modification of a debtor's cash-collateral order permitting continued use of disputed receivables, when the debtor retains at least an equitable interest in the property, forcing a shutdown would be inequitable, and the creditor's interests remain adequately protected.