Business Bankruptcy in Minnesota: 5 Facts for a Minneapolis Filing

A Minneapolis company that wants to spend its own receipts during the first weeks of a chapter 11 case must first put its arithmetic under oath. The District of Minnesota's local rules require a verified calculation of what the company owes its secured creditors and what the cash they claim is worth, and that requirement shapes the opening of a business case in Minnesota more than any other local provision.

The federal statute is identical in Minneapolis and in Miami. The verification, the courthouse, the trustee's office, and the homestead figure an owner can protect are Minnesota's own, and they are the subject of what follows.

1. Hennepin County Files in the Fourth Division, Ramsey County in the Third

By statute, 28 U.S.C. 103, "Minnesota constitutes one judicial district comprising six divisions." The Fourth Division includes Hennepin, Anoka, Carver, Wright, Sherburne, and several others, and holds court at Minneapolis. Ramsey, Dakota, and Washington counties belong to the Third Division, which sits in Saint Paul.

One district means one set of local rules and one clerk's office. The division decides the building.

2. The Court and the U.S. Trustee Work Under One Roof on South Fourth Street

The Minneapolis bankruptcy court is at 301 Diana E. Murphy United States Courthouse, 300 South Fourth Street, and its clerk answers at (612) 664-5200. The Saint Paul location is 200 Warren E. Burger Federal Building, 316 North Robert Street. The court's pages for Duluth and Fergus Falls carry the notation "No Mail or In-Person Delivery," so papers do not go there.

Minnesota belongs to Region 12 of the U.S. Trustee Program, a region that also covers Iowa and the Dakotas and whose regional office is in Des Moines. The Minneapolis field office is in the same courthouse, Room 1015. The court also publishes a running list of its open chapter 11 cases, which a creditor or a curious competitor can consult.

3. Using Cash Collateral Requires a Sworn Calculation and a Cash Flow Projection

The Bankruptcy Code sets the baseline. Under 11 U.S.C. 363(c)(2), a debtor "may not use, sell, or lease cash collateral" unless every entity with an interest in it consents, or the court, after notice and a hearing, authorizes the use. Cash collateral, in 363(a), includes deposit accounts and cash equivalents in which the estate and someone else both hold an interest, together with the proceeds of collateral, whether acquired before the case or after.

Minnesota adds a layer. Local Rule 4001-2 of the District of Minnesota's local rules, effective September 3, 2025, requires a motion to use cash collateral to include, beyond what the national rule asks, "a verification" setting out the debtor's calculation of the secured debt, a description of the cash collateral, its estimated value on the petition date and at the start and end of the period for which use is requested, and "the debtor's cash flow projections."

Consider what that means for a hypothetical Minneapolis staffing firm with a bank line secured by its receivables and two merchant cash advance contracts whose funders filed financing statements against the same receivables. Whether either funder holds an interest that makes the firm's receipts its cash collateral depends on the contract language, the filings, and how a court reads both; the answer can differ from one funder to the next, and neither side should assume it. The verification forces the firm to commit to a number for each claimed secured debt, to describe the receivables and deposit accounts at issue, to estimate their value today and at the end of the requested period, and to show through projections that payroll can be met without the collateral shrinking below what the secured parties are owed. It is a sworn document. It will be read by the bank's lawyer, by each funder's lawyer, and by the U.S. Trustee, and every figure in it can be tested at the hearing.

The rule is sensible. It is also merciless to a company that arrives without books.

A firm whose bookkeeping stopped in the spring, when the daily debits began to outrun deposits, will find that the first thing the Minnesota court asks of it is the one thing it has neglected. (Neglect is the wrong word, if we are fair about it; the owner was spending every hour trying to make payroll, and reconciling a ledger felt like a luxury. The court does not weigh that.) The projections are the part most often underestimated. They must show not only that the business survives the next thirty days but that the secured creditors are adequately protected while it does, because 363(e) lets a creditor with an interest ask the court to prohibit or condition the use.

No rule in Minnesota's book requires a company to prepare this verification before it files. The rule requires it at the moment of the motion, which in an operating business comes within days of the petition, so as a practical matter the work begins earlier.

4. The Homestead Figure Is Large, and It Moves

Minnesota has no statute located in this research that bars its residents from the federal exemption list, so an individual owner generally chooses between the federal and state schedules. For an owner with equity in a house, the state homestead is the figure to study. Minn. Stat. 510.02, as the Revisor of Statutes displayed it in September 2026, provides that the exemption "per homestead, whether the exemption is claimed by one or more debtors, may not exceed $510,000 or, if the homestead is used primarily for agricultural purposes, $1,275,000," on up to 160 acres.

Two features deserve attention. The cap is per homestead, so a married couple does not double it. And the figure changes periodically under a formula tied to section 550.37, announced by the commissioner of commerce, which means the number an owner reads today may not be the number in force on the day a petition is filed. An owner who has personally guaranteed the company's debts should confirm the current figure with counsel before relying on it.

5. No State Disclosure Law, and Mediation by Referral

Minnesota is not among the ten states on a March 2026 law firm compilation of commercial financing disclosure statutes. The court's Rule 9019-2 allows it to refer an adversary proceeding or contested matter to mediation "by a federal judge or a mediator agreed to by the parties," and Rule 3017.1-1 governs objections to disclosure statements in small business and subchapter V cases.

Before the Motion, the Numbers

Some Minneapolis companies should be talking with a Minnesota bankruptcy lawyer this week: those facing a frozen account, a pending lawsuit, or secured debt that no negotiation will reduce. Delancey Street is a debt settlement company and not a law firm, so it does not prepare verifications, file motions, or appear in the Diana E. Murphy courthouse. What it offers is a free, confidential review of a company's merchant cash advance and loan contracts and its bank activity, with independently licensed attorneys brought in when a matter turns legal, for owners who want to learn whether their creditors might accept a negotiated restructuring before a court becomes necessary.

The verification the Minnesota rule demands is a document about what a business owes, what it owns, and what it expects to collect. Owners who prepare one for a bankruptcy court and owners who prepare one for a negotiation are, in the end, doing the same honest accounting for different readers.