Monthly Operating Reports in Chapter 11: 5 Numbers the US Trustee Reads First

If you file Chapter 11, then bankruptcy rules require you to fill out forms to document your performance every month. The US Trustee’s office also monitors your case. The first numbers that a Trustee will look for is your cash receipts and cash disbursements. They expect you to be transparent about four other items that matter: payments on pre-bankruptcy debt, payments to insiders, taxes, and the Trustee’s fee.

Filing late reports, skipping Trustee fees, unpaid post-filing taxes or lapsed insurance can all be grounds to convert or dismiss your case. So you have to watch your cash and the clock.

The job of this monthly report is to capture how much money you got last month, how much you paid and how that amount left you at month’s end. Cash in, cash out, and profit for the month and since filing, across every bank account: these are the Trustee’s first asks. If you show receipts far below projections, or below prior performance, it could be the first sign of a bad quarter. The Trustee wants more than a one-page summary, so you file a granular statement of receipts and disbursements that captures every bank account, a balance sheet that separates the pre-filing debts from the post-filing debts, and a profit and loss statement compared with projections.

Payments on Pre-filing Debt

Next after cash, the Trustee wants to know about payments on pre-filing debt. If you paid anyone on older debt, then you have to show it here. The point is to keep the court up on how you spend money.

Third, the Trustee wants to know about payments to insiders. The Trustee also wants to know about any payment made outside the ordinary course of business without court approval. Be ready to file a schedule of every payment to insiders. The Trustee may also ask for bank statements and reconciliations for every account you have.

The fourth item in the monthly operating report is your tax compliance since filing bankruptcy. On this form, your job is to say whether you filed any required returns and paid all due taxes. The report also asks about your insurance policy. A pause in coverage could put everyone’s recovery at risk. It also has to show when you got new credit since filing your case. The report has to list professional fees that the court approved, for the month and since filing.

Fee to the US Trustee’s Office

The fifth number to track each month is the fee to the US Trustee’s office for keeping an eye on your case. This number is based on your total disbursements each quarter, with a minimum of $250, whether you paid anything out or not. A quarter when you paid a million dollars or more out gets an effective rate of 0.9% outside Subchapter V through 2030. However, it is capped at $250,000 each quarter. You pay it no later than one month after the quarter ends. Pay online at Pay.gov. Come up short and the Trustee has a reason to start asking harder questions.

UST Form 11-MOR

You file UST Form 11-MOR no later than the 21st of the following month, unless local rule says otherwise. Filing the monthly operating report stops only if your plan takes effect, the case converts to another chapter, or it is dismissed. Someone authorized by the company has to sign it under penalty of perjury. Don’t change the form. The way you book your accounts has to use GAAP standards, unless your business already used another accounting standard before filing. Different related companies in the same case still file their own reports.

If you are a small business or in Subchapter V, you must instead use Form 425C to report cash in and out, and compare the actuals against earlier projections. For cases filed after the 15th, the rest of that month rolls into the next month’s report. As a small business, you must keep up your trade’s customary insurance, too, and post-filing taxes must be current unless you are diligently contesting them.

Review each report before you sign it. The consequences for coming up short, or being late to report, can be high. Check your business performance regularly against your projections.