CYR, Chief Judge.

An emergency appeal has been taken from various orders of the bankruptcy judge entered during the early stages of these chapter 11 reorganization proceedings. The Garland Corporation and its subsidiaries [debtor] manufacture and sell clothing, principally knitted goods and sportswear for women. From its earliest beginnings, the debtor achieved financial success as a sweater manufacturer. Severe financial difficulties later developed in the wake of its operation of thirty six retail stores and a factory producing clothing principally for Levi Strauss, and its entry into the field of sportswear design and manufacture.

Upon the commencement of its reorganization proceedings, the debtor sought authorization to borrow operating funds from New England Merchants Bank [Bank] and Prudential Insurance Company [Prudential]. Following an ex parte hearing the same day, the bankruptcy judge authorized an immediate borrowing from the Bank and Prudential, fixing May 7, 1980, after the formation of the Creditors' Committee, for further hearing on the application. At the conclusion of the May 7 hearing, the Creditors' Committee having appeared without interposing objection, the bankruptcy judge authorized the debtor to borrow an additional $700,000 and to enter into a line-of-credit agreement with the Bank and Prudential for up to $1.4 million in postpetition borrowings. These postpetition loans were later deemed priority costs of administration under Bankruptcy Code § 507(b) and a first encumbrance on all assets of the debtor.

On May 16, the Creditors' Committee appeared in opposition to the request of the debtor to borrow an additional $500,000, and filed a motion to convert the proceedings to chapter 7. After hearing, the bankruptcy judge approved the $500,000 borrowing, increased the line of credit to $1.7 million, declined to convert the proceedings to chapter 7, and granted a motion by the U.S. trustee to appoint a trustee. The Creditors' Committee appeals.

The Appellate Panel authorized an expedited appeal, while denying a stay pending appeal. Immediately following oral argument, the Appellate Panel affirmed the orders of the bankruptcy judge declining to convert the proceedings to chapter 7 and appointing a reorganization trustee. The Panel deferred its decision on the remaining issue in response to Bankruptcy Code § 364(e).

The appellant challenges the May 16 order authorizing a third borrowing in the amount of $500,000 on grounds that the evidence did not demonstrate a reasonable likelihood that the debtor could be successfully rehabilitated, and because the borrowing of operating funds secured by theretofore unencumbered assets requires adequate protection of the interests of unsecured creditors, within the meaning of Bankruptcy Code § 361, in the absence of which the borrowing constituted a taking of property without just compensation, contrary to the fifth amendment to the Constitution of the United States. The decision of the bankruptcy judge permitting the continued operation of the debtor under the direction of a trustee was challenged on the same grounds.

The refusal to convert the case to chapter 7 and the approval of the motion to appoint a trustee to operate the business were based on findings, adequately supported by the record, that the future financial condition and business prospects of the debtor would be significantly enhanced were it to dispose of its retail stores and the Georgia plant, terminate all but its sweater manufacturing operation, reduce its top-heavy payroll, and bring in new management. The appellant did not deny that significant reductions in employee and executive payrolls and the sale of the retail outlets would produce beneficial results. The likelihood that substantial benefits would result from an aggressive implementation of these initiatives was substantiated by the appellant's own witness. There was uncontroverted evidence that current management had erred seriously in the past, particularly in its cash flow projections and unprofitable business undertakings. The appellant mounts no serious challenge to these findings, but believes it would be better for the estate and creditors were the debtor liquidated under chapter 7.

The only basis for converting an embryonic reorganization proceeding under section 1112(b)(1) is a sufficient showing that the debtor would continue to sustain losses or diminish the estate if the reorganization effort is permitted to proceed and that there exists no reasonable likelihood of rehabilitation. Bankruptcy Code § 1112(b)(1). While the debtor's own projections clearly evidenced the near certainty of short-term operating losses, the bankruptcy judge concluded, appropriately in our view, that there existed a reasonable likelihood that the debtor could be rehabilitated. See 5 Collier on Bankruptcy, ¶ 1112.03[c][i] (15th Ed. 1980) at 1112-14. Where there is a reasonable prospect of a successful rehabilitation a motion to convert under section 1112(b)(1) must be denied. Id.

The appropriateness of the decision to appoint a reorganization trustee under Bankruptcy Code §§ 1104 151104 turns upon whether there was a sufficient showing of cause, including incompetence or gross mismanagement of the affairs of the debtor by current management, either before or after the commencement of the case, or, in the alternative, a showing that the appointment would be in the best interests of the creditors and the estate. See, e. g., In re Hotel Associates, Inc., 3 B.R. 343, 1 CBC 2d 733, 6 BCD 160 (E.D.Penn. 1980). There is a presumption in a chapter 11 case that the debtor is to continue in control and possession of its business. LaSherene, Inc. d/b/a The Sunshine Corporation, 3 B.R. 169, 174, 1 CBC 2d 685, 692, 6 BCD 153, 156 (N.D. Georgia 1980).

The Appellate Panel must accept the findings of the bankruptcy judge unless clearly erroneous. First Circuit Rules Governing Appeals From Bankruptcy Judges to District Courts, Appellate Panels and Court of Appeals, Rule 16. In re Multiponics, Inc., 622 F.2d 709, 713 (5th Cir. 1980); Boston and Maine Corp. v. First National Bank of Boston, 618 F.2d 137, 141 (1st Cir. 1980). The findings of fact are amply supported by the record, and the conclusions of law, freely reviewable on appeal, In re Multiponics, Inc., supra, comport with the legislative prescriptions of sections 1104(a) [151104(a)] and 1112(b)(1).

Appellant next challenges the authorization under section 364(c)(2) to borrow operating funds secured by unencumbered assets. The appellant insists that it was an abuse of discretion to permit the May 16 loan to be secured by unencumbered assets of the debtor, without first determining that the debtor was unable to obtain unsecured credit, as required by Bankruptcy Code § 364(c).

The May 16 borrowing was another in a series arranged pursuant to a line-of-credit agreement among the debtor, the Bank and Prudential, approved by the bankruptcy judge on May 1, 1980. The May 1 order contains an express finding that unsecured financing was not available to the debtor. A review of the sufficiency of the evidence supporting this finding is severely hampered by the failure of the appellant to include the April 30 hearing transcript in the record on appeal. Without such a transcript we decline to review. In re Colonial Realty Investment, 516 F.2d 154, 160 (1st Cir. 1975). The May 1 order was not appealed and is not, therefore, before us. Neither is there any evidence before us that the ability to obtain unsecured financing improved between May 1 and May 16.

Appellant is the official Creditors' Committee representing the holders of unsecured claims against the debtor. The Creditors' Committee is concerned that the satisfaction of unsecured claims may be delayed, diminished or rendered impossible as a result of the authorization to encumber "free" assets as security for postpetition operating loans. Its position appears to be that holders of unsecured claims whose recoveries may be thus materially impaired are entitled, by statute as well as by constitutional guarantee, to adequate protection in advance of the fixing of liens on unencumbered assets as a means of obtaining postpetition operating loans to finance the future operations of the reorganization debtor.

The May 16 borrowing was authorized under Bankruptcy Code § 364(c)(2), after notice and a hearing, upon a sufficient showing that the debtor was unable to obtain unsecured credit. The debtor was in urgent need of operating funds with which to meet its payroll. Its 1,300 employees had been instructed not to report for work without calling in advance to learn if the plant would open. The appellant's own witnesses and committee members confirmed that essential raw materials were available only on a cash-on-delivery basis and that other trade creditors would not produce the needed yarns without assurances of payment. The record substantiates the finding that the urgently needed operating monies were otherwise unavailable.

There is no express statutory requirement that holders of unsecured claims be provided "adequate protection." Adequate protection within the meaning of Bankruptcy Code § 361 need be provided only as expressly required under section 362, section 363, or section 364. There is no requirement of adequate protection in respect to credit obtained under Bankruptcy Code § 364(c)(2).

The authorization to use previously unencumbered assets as collateral for postpetition operating loans is further challenged as an unconstitutional deprivation of the fifth amendment rights of unsecured creditors.

The bankruptcy power conferred by the Constitution upon the Congress is subject to fifth amendment guarantees against the taking of private property without just compensation. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 589, 55 S.Ct. 854, 863, 79 L.Ed. 1593 (1935). The fifth amendment guarantees protection against any taking of private property, even for a purpose wholly public in nature, without just compensation. 295 U.S. at 602, 55 S.Ct. at 869. Therefore, no taking of private property, in reorganization proceedings or otherwise, can be countenanced by the court in contravention of the "just compensation" clause.

Although our attention has not been invited to any authority for the proposition that holders of unsecured claims possess constitutionally protected substantive rights in property of the estate of a reorganization debtor, it is at least arguable that the fixing of a lien on property of the estate under the bankruptcy laws in certain circumstances may constitute a taking within the meaning of the "just compensation" clause. It is in the area of collateral impairment, however, that such constitutional concerns more frequently arise in a reorganization context. It seems generally agreed in broad outline at least that Congress in the exercise of its bankruptcy power cannot deprive a creditor of substantial preexisting property rights in specific collateral, without just compensation. Armstrong v. U.S. 364 U.S. 40, 44, 48-49, 80 S.Ct. 1563, 1566, 1568, 1569, 4 L.Ed.2d 1554 (1960); 295 U.S. at 602, 55 S.Ct. at 869. Nevertheless, there are no constitutional constraints inhibiting Congress in the exercise of its bankruptcy power from extinguishing the recovery rights of holders of unsecured claims, because an unsecured claim confers no right in specific property of the obligor. 295 U.S. at 588, 55 S.Ct. at 863. Congress may rearrange the order of distribution of the property of a bankrupt estate without infringing the constitutional rights of the holders of claims thereby deprived of recoveries otherwise available under the preexisting scheme of priority. See, e. g., New York Credit Men's Adjustment Bureau, Inc. v. Jesse Goldstein Co., 276 F.2d 886, 888 (2d Cir. 1960); City of Chelsea v. Dolan, 24 F.2d 522, 523 (1st Cir. 1928).

Appellant represents the interests of holders of unsecured claims against the debtor. Their constitutional rights do not rise to the level accorded lien creditors, id. at 523, and their claims are subject to discharge under federal bankruptcy laws, inasmuch as the constitutional proscription against impairing the obligation of contracts applies to the states alone. Louisville Joint Stock Land Bank v. Radford, 295 U.S. 555, 589, 55 S.Ct. 854, 863, 79 L.Ed. 1593 (1935).

Any impairment of the recoupment anticipated by holders of unsecured claims from unencumbered assets of the estate is dependent for its redress upon congressional rather than constitutional prescription. See New York Credit Men's Adjustment Bureau v. Jessie Goldstein Co., 276 F.2d 886, 888 (2d Cir. 1960); City of Chelsea v. Dolan, 24 F.2d 522, 523 (1st Cir. 1928). Congress has chosen to exercise its substantive bankruptcy power so as not to require "adequate protection" of the interests of the holders of unsecured claims under the Bankruptcy Code in circumstances where the debtor obtains postpetition credit on the strength of a lien on previously unencumbered property of the estate theretofore available in whatever measure for the satisfaction of unsecured claims. See Bankruptcy Code §§ 361 364(c)(2). The only criteria mandated by Congress for the fixing of a lien on free assets pursuant to section 364(c)(2) are that such action be authorized by the court, after notice and a hearing, upon a showing that unsecured credit cannot be obtained. Since there are no other constitutional or legislative requirements, the court may permit the use of unencumbered assets as collateral to secure postpetition indebtedness upon compliance with section 364(c)(2).

Affirmed.