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Cash Collateral Motions Can’t Rule on the Validity/Invalidity of a Secured Claim

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Douglas Tabachnik

So where does this leave us on a motion to reclassify a secured claim as unsecured if the debtor contends that the lien is not properly perfected? Sounds like it needs an adversary proceeding.
Wed, 2026-02-04 08:56 Permalink
Mark Lammey

But what about FRBP 3012? 3012(a) incorporated the §506(a) standard which permits determination of the amount of a secured claim up to the estate's interest in that property. 3012(b) then permits this determination to be done by motion as an exception to 7001(b). If the dispute is really that the alleged collateral doesn't support the full amount of the secured claim or perhaps doesn't exist, the debtor could theoretically expedite a 3012 motion to run concurrent with a cash collateral motion and be permitted to litigate the merits of the nature and value of the collateral. And that does appear to be the issue here, no? Debtor was alleging that no receivables existed that were subject to the Evolution factoring agreement which seems like it could arguably fall into a 506(a) determination.
Wed, 2026-02-04 09:44 Permalink
Bill Rochelle

Mr. Lammey makes a good point. However, 3012(a) refers to a determination of the amount of a secured claim, not the validity or enforceability. That said, I am not sure that every court in the U.S. would concur with the holding in First Brands.
Wed, 2026-02-04 09:52 Permalink