Understanding First-Day Motions in Bankruptcy

Los Angeles attorney takes action to keep businesses running during Chapter 11

First-day motions are requests that are made in bankruptcy court shortly after Chapter 11 petitions are filed. Their purpose is to allow companies to maintain stability and remain operational during the Chapter 11 case. The bankruptcy attorneys at the Law Offices of Michael Jay Berger in Beverly Hills are skilled at properly preparing and arguing these motions to gain court approval. Our firm represents businesses and individuals throughout Southern California. 

What first-day motions accomplish in a Los Angeles Chapter 11

Businesses in Chapter 11 file first-day motions to ask the court for permission to pay employees, keep up with rent and carry on other essential operations. These motions are heard at a hearing that is typically held within a day or two of the filing of a Chapter 11 bankruptcy for active businesses. We help Los Angeles and Southern California businesses by drafting supportable immediate relief motions. 

Common first-day motions filed in the Central District of California 

Businesses typically file the following types of first-day motions:

• Cash collateral use motions
• Cash management/existing bank account use motions
• Employee wage and benefit motions
• Vendor payment motions
• Utility protection motions
• Debtor-in-possession financing motions

A Los Angeles business bankruptcy lawyer from our firm will assess your company’s needs and prepare a tailored and thorough first-day motion package to promote operational continuity. 

Cash collateral and debtor-in-possession financing requests 

Cash collateral consists of cash, negotiable instruments, title documents, securities, deposit accounts and other cash equivalents. Because secured creditors hold an interest in the cash or equivalent property, using it requires approval by the lender or the court. Sometimes companies need additional credit to maintain operations. After negotiating terms with existing and new lenders, we prepare debtor-in-possession financing motions in order to gain court approval. 

Wage, employee benefits and payroll continuation motions 

Payroll first-day motions are meant to enable employees to continue to receive wages and benefits earned after the bankruptcy filing on a normal payment schedule. Motions can also request prepetition wages, as employees may not have been paid when companies are in debt and struggling. Payment of prepetition wages earned within 180 days before the bankruptcy filing are given priority status, subject to a statutory cap of $17,150 of wages owed per employee. 

Critical vendor and supplier payment motions 

Critical vendors are suppliers without whose products or services a company may be unable to reorganize at all. Often, these vendors may not have been paid prior to petition filings when a company is experiencing financial distress. With court authorization, critical vendors can be paid the prepetition monies they are owed in order to preserve operations. We build strong arguments about the necessity of critical vendors to the business. 

Contact our Beverly Hills bankruptcy attorney for first-day motion filings

The Law Offices of Michael Jay Berger in Beverly Hills pursues first-day motions to keep Southern California businesses operational during Chapter 11 bankruptcy proceedings. Call 310-271-6223 or contact us online to speak with an attorney.