Business Bankruptcy in Boston: 5 Facts About the District of Massachusetts

In the District of Massachusetts, several terms a lender likes to write into a cash collateral agreement are unenforceable by local rule, subject to exceptions the same rule sets out, before any judge has read the agreement. That is the most distinctive thing about a business bankruptcy in Boston, and it bears directly on a company whose receivables a merchant cash advance funder claims.

The Bankruptcy Code itself is uniform; the automatic stay in Boston is the automatic stay in Baton Rouge. What a business bankruptcy attorney in Boston must add to it is local: the court's rules, the trustee's office, and a homestead statute that the legislature rewrote in 2024.

1. One District, and Three Bankruptcy Courthouses

Under 28 U.S.C. 101, "Massachusetts constitutes one judicial district. Court shall be held at Boston, New Bedford, Springfield, and Worcester." The bankruptcy court lists three locations, Boston, Worcester, and Springfield, and there is no question of which district a Massachusetts company belongs to, only of which courthouse.

The Boston court sits in the John W. McCormack Post Office and Court House, 5 Post Office Square, Suite 1150.

2. The Trustee Works in the Same Building

Region 1 of the United States Trustee Program covers Maine, Massachusetts, New Hampshire, and Rhode Island, and its regional office occupies Suite 1000 of the court's own building at 5 Post Office Square. A Massachusetts chapter 11 debtor's monthly reports, its meeting of creditors, and the trustee's objections all originate at that address.

3. Boston's Rules Strike Certain Lender Terms Before Anyone Argues Them

The Massachusetts Local Bankruptcy Rules took their current form on May 1, 2025. MLBR 4001-2 governs the use of cash collateral, obtaining credit, and the stipulations that settle those questions between a debtor and its secured creditors. A motion must be served on every creditor claiming an interest in the cash collateral and, absent a committee, on the twenty largest unsecured creditors and the U.S. trustee. Interim relief is limited to what is "necessary to avoid immediate and irreparable harm to the estate pending a final" hearing.

Then comes subsection (c).

"Subject to section (d), the following provisions contained in an agreement between the debtor and the holder of a secured claim as to use of cash collateral, obtaining credit, or adequate protection, or any interim or final order ... shall be unenforceable."

The list begins with "(1) Cross-collateralization clauses," meaning provisions that secure a lender's prepetition debt with assets the debtor acquires after filing (the rule carves out exceptions). It continues with "(2) Concessions as to the status of prepetition lien or debt," and "(3) Provisions creating liens on bankruptcy causes of action," and it reaches other terms, among them a waiver of the debtor's right to seek use of cash collateral later. Section (d) sets out when some of these provisions may survive, and the practitioner will read it line by line; the owner needs only to know that the default runs against the lender.

The consequences for a company with merchant cash advances are specific. A funder that claims a security interest in the company's receivables and deposit accounts will, in the first days of a case, often be the party whose consent the debtor needs to spend its own cash. The price of that consent, in many districts, can include an agreement that the funder's lien is valid and its balance correct. In Massachusetts that concession, written into the agreement, meets a rule that says it is unenforceable absent the (d) exceptions. The debtor keeps, in principle, the argument that the funder's contract was a disguised loan, or that its filing did not reach the accounts it claims. A funder that wanted certainty on day three must now wait for it, and the wait changes what it will accept in a negotiated plan, which is where the argument about a Boston restaurant group's four advances began, before anyone thought about liens at all, as a question of what the company could afford to pay each week.

Whether a funder that knows these rules will lend on harder terms to Massachusetts businesses in the first place is not something the rules can answer.

4. Small Cases Have Rules of Their Own

MLBR 3017.1-1 governs the filing of a plan and disclosure statement "in small business cases and in certain cases under subchapter V." MLBR 3022-2 allows an individual chapter 11 case, though not a Subchapter V case, to receive an administrative closing. MLBR 9019-1 addresses stipulations and settlements, and the rules also refer to mediation, arbitration, and other alternative dispute resolution; the court maintains a Mediator Registry.

For a small company in Subchapter V, whose qualifying debts cannot exceed $3,424,000 (the Judicial Conference's adjusted number as of April 1, 2025), these rules and the Code's own Subchapter V timeline will set the pace of the case.

5. The Homestead Is $125,000 Automatically and $1,000,000 by Declaration

Massachusetts has no statute found in this research that opts out of the federal exemptions, so under 11 U.S.C. 522(b) a Massachusetts debtor chooses between the federal list and the state list. The state list includes a homestead that reaches seven figures for an owner who takes the trouble to claim it.

M.G.L. chapter 188, section 1 defines an "Automatic homestead exemption" as "an exemption in the amount of $125,000 pursuant to section 4," which exists without any filing, and a "Declared homestead exemption" as "an exemption in the amount of $1,000,000 created by a written declaration, executed and recorded pursuant to section 5." Owners holding together share a single cap in each case.

In August 2024, the legislature struck "$500,000" from that definition and inserted "$1,000,000," in section 51 of chapter 150 of the Acts of 2024, approved on August 6 of that year. The declaration is a document recorded at the registry of deeds. An owner who never recorded one has the automatic $125,000 and nothing more.

Federal law trims the figure for recent purchases. Under 11 U.S.C. 522(p), a debtor who uses state exemptions cannot protect more than $214,000 (the amount in effect since April 1, 2025) of homestead interest acquired in the 1,215 days before filing, apart from equity rolled over from an earlier home in the same state. The homestead belongs to the owner, not to the LLC, and it matters when a personal guaranty brings the owner into a case of her own.

Massachusetts does not appear among the ten states Venable LLP listed in March 2026 as having commercial financing disclosure laws, and this research found no Massachusetts statute of that kind.

The Paper That Protects an Owner

A Boston company facing a secured lender's foreclosure, an attachment on its accounts, or a payroll it cannot meet needs Massachusetts bankruptcy counsel, not a negotiator. Delancey Street sits on the other side of that line as a debt settlement company, not a law firm; it files nothing in court and gives no legal advice. Where there is still time, it looks at the funder agreements and the rest of a company's business obligations for free and in confidence, with independently licensed attorneys brought in when the issues become legal ones.

The strongest protection on this page is a recorded declaration that costs little to prepare, and many owners who could have recorded one never did. Most of the law that decides these cases is like that: written down years before anyone needs it, and read only afterward.