Cash Collateral

When you have a mortgage, the collateral is your house. With a car loan, the car represents your collateral. Cash collateral is cash or cash equivalents that a company puts aside for their creditors to collect on, in the event they go belly up and have to file Chapter 11 bankruptcy. It's collateral that's cash.

Creditors have the ability to collect from the sale of securities, assets, furniture, light fixtures, toilet seats...whatever they can get their hands on and is covered in the bankruptcy filings. It's kinda like the rundown, roach infested apartment you rented in college from the local slumlord. He kept your parent's fat security deposit as collateral for any damages that might have come about during the nightly keggers you hosted. (You had planned to diligently study each night but your foreign exchange student roommate had other plans).

And when you moved out, your landlord kept every single penny of that cash collateral even though you tried to clean the vomit stains out of the carpet and fill the holes with toothpaste.