Chapter 11 Filing Requires Intensive Documentary Preparation

A Chapter 11 bankruptcy allows a business in financial distress to reorganize and restructure its debts while continuing to operate, with the goal of returning to solvency. Filing for Chapter 11 is a complex process that requires substantial documentation. The bankruptcy trustee needs to have a complete picture of the company’s finances in order to determine if the proposed Chapter 11 plan is likely to succeed. A business owner and their Chapter 11 attorney must work diligently in advance to gather and prepare all required paperwork.

One of the first steps in a Chapter 11 is assembling the “7-day package,” which is a set of essential financial documents that must be submitted within a week after filing the bankruptcy petition. This package must include the following:

1. Statements regarding ownership of real property
2. Disclosures of bank accounts, both pre-petition and new
3. Proof of insurance coverage
4. Proof of holding all certificates and licenses required by federal, state and local law for the lawful operation of the debtor’s business
5. A projected cash flow statement, covering the first 90 days of operation under Chapter 11
6. A statement of major Issues facing the company and a timetable for resolution
7. Copies of the business’s federal and state tax returns for the two most recent tax years
8. A list of all company insiders as defined in the Bankruptcy Code.
9. A balance sheet, listing the company’s assets, liabilities and shareholder equity
10. A profit and loss statement, showing revenues and expenses over a specific period
11. A cash flow statement, detailing all receipts and disbursements
12. A statement of accounts receivable and payable

Beyond the 7-day package, a complete Chapter 11 bankruptcy filing requires additional documentation that includes the following:

• Plan of reorganization — A document outlining how the business intends to restructure its debts and operations to emerge from bankruptcy successfully
• Statement of financial affairs — A disclosure form providing detailed financial information, including income, transfers of property, lawsuits and payments to creditors
• List of creditors — A comprehensive list of all creditors, including names, addresses, and amounts owed
• Executory contracts and leases — Documentation of all contracts and leases the business is currently a party to, including rental agreements and equipment leases
• Disclosure statement — A document that provides creditors with essential information about the business’s finances and proposed reorganization plan
• Monthly operating reports — Financial statements that must be filed throughout the case to show the business’s ongoing financial condition and compliance with court requirements

Since filing for Chapter 11 involves extensive financial documentation and legal strategy, business owners should expect to work closely with their bankruptcy attorney for several months before submitting their petition. The process requires a thorough review of financial records and strategic planning in order to promote a successful reorganization.

The Law Offices of Michael Jay Berger in Beverly Hills is well-equipped to assist business owners in preparing the necessary documents for Chapter 11 and guiding them through the process with a view to achieving the best possible outcome. Call {ln::phone} or contact us online for a free consultation.