I often get questions from potential clients about the Chapter 11 process about what is required to be done by the actual Debtor. Below are three of the most important and often less spoke about requirements of the Debtor-In-Possession.
Debtor-In-Possession Bank Accounts
The Debtor-In-Possession upon filing of the bankruptcy case is supposed to close out all pre-filing bank accounts and open up new Debtor-In-Possession ("DIP") accounts. Depending on your situation you will be allowed to open one to three accounts. One is generally your operating account, the second is for taxes, and the third is for payroll. Individuals normally only open the one operating account. Certain federal depositories are approved when opening up the accounts so please check with your local counsel before deciding on what bank to use. Before you say "wow" please look at the next requirement. This small number of bank accounts really helps with the second requirement.
Monthly Operating Reports
The Debtor-In-Possession is required to file monthly operating reports on the 21st day of the month, every month. The report is not very complex but it does force you to get organized. It forces the Debtor-In-Possession to list all income and every expense. A sample operating report can be viewed at www.justice.gov/ust/r21/reg_info.htm. Each type of case has a different report to use, small business, business, or individual.
U.S. Trustee Quarterly Fees
The Debtor-In-Possession is also required to pay quarterly fees to the U.S. Trustee for monitoring the case. This fee is due on the last day of the month following the close of the quarter. For example, the fee for the 4th quarter (October, November, & December) is due on January 31 of the next year. This fee is all based upon your quarterly disbursements. For smaller cases this is normally either $325.00 which is based on disbursements between $0.00 and $14,999.00 or $650.00 which is based on disbursements between $15,000.00 and $74,999.00. A complete list of the fee can be found at www.justice.gov/ust/r21/reg_info.htm.
The above requirements of the Debtor are obviously not exhaustive but are three of the most common requirements that are rarely discussed in initial appointments. Please take them into consideration before deciding to move forward with the Chapter 11 process. If you can handle these three requirements then your case should move a lot smoother. Should you have any questions about these requirements please feel free to go to chapter11jax.com for more information or call me at (904) 521-9868.