Bank loaned Acme, Inc. $10,000 (with 10% annual interest) and has a perfected
security interest in a car owned by Acme. Unfortunately, Acme files for bankruptcy,
while all of the principal is still unpaid (all interest payments have been made).
The fair market value of the car, on which everyone agrees in this case, is $8,000
at the time of filing for bankruptcy. The Bank goes to the bankruptcy judge and
asks the judge to lift the automatic stay. Will the judge lift the stay?
1) No, if Acme's bankruptcy trustee will pay the Bank enough cash to offset
the expected depreciation in the car's value
2) Yes, since the car is not necessary for Acme's effective reorganization
3) Yes, since Acme has no equity in the car
4) No, since it is unlikely that the Bank can convince the court that its
interest in the car is not adequately protected