## Facts

- GGVXX, Ltd. owned real property developed and operated as a golf course and generated revenues from greens fees, cart rentals, range balls, club rentals, and related charges.
- King Valley Development Corporation loaned money to GGVXX and held perfected liens on the golf-course real property and certain unrelated personal property.
- After GGVXX filed Chapter 11 and operated as debtor-in-possession, King obtained an order restricting use of alleged cash collateral and requiring accounting and sequestration.
- The parties disputed whether postpetition golf-course receipts and separate “golf school” payments were “cash collateral” under 11 U.S.C. § 363(a) as “rents” or “profits” subject to King’s real-estate lien.

## Issues

1. Whether greens fees and similar golf-course operating receipts constitute “rents” (and thus “cash collateral”) under 11 U.S.C. § 363(a) subject to a real-property lien.
2. Whether payments from a golf school, characterized as rent for use of part of the premises, constitute “rents” and therefore “cash collateral” under § 363(a).

## Decision

- The court held that greens fees and related operating revenues (including charges for carts, range balls, and club rentals) were not “rents” and therefore were not King’s cash collateral.
- The court held that golf-school payments expressly characterized as rent for use of real property were “rents” and therefore were King’s cash collateral.
- As a result, GGVXX could use ordinary operating receipts without § 363 cash-collateral restrictions, but could not use the golf-school rent payments absent consent or court authorization with adequate protection.

## Legal Principles

- “Cash collateral” under 11 U.S.C. § 363(a) includes “rents” and “profits” of property subject to a security interest, but only to the extent the creditor has an interest in the specific postpetition revenue stream.
- Payments for services or a temporary, revocable privilege to use property (without a possessory estate or tenancy) are generally not “rents” for cash-collateral purposes.
- Revenue structured as consideration for the use or occupancy of a defined portion of real property, and described as rent, may be treated as “rents” covered by a real-estate lien and thus as cash collateral.
- A real-property lien with rents-and-profits language does not automatically reach all operating receipts generated on the premises; capturing business revenues typically requires a security interest in personal property interests such as accounts, perfected under applicable commercial law.

## Conclusion

The bankruptcy court drew a line between active business receipts and true real-property rent: routine golf-course operating revenues were not cash collateral as “rents,” while golf-school payments denominated as rent for premises use were cash collateral subject to § 363 limits.


In re GGVXX, Ltd., 130 B.R. 322 (Bankr. D. Colo. 1991)