How to File Chapter 11: 7 Documents the Court Expects at the Start

A lot goes into starting a Chapter 11 case, which is why you hire counsel early (they know what the court expects). Aside from a basic petition, the court wants all manner of lists and schedules filed early: a creditor matrix, a list of the 20 largest unsecured creditors, schedules and a statement of financial affairs, an equity holders list, and (if this is a small business) its latest financial statements and tax return. Some of this is due at the outset, and the rest within 14 days. The initial court filing also has a filing fee.

Practically every one of these items in the checklist requires information from your records. If your company is one of those who leaves their books in disarray, scrambling together the documents at this stage is a nightmare. A good management practice is to have all your financial statements up to date and ready at any time.

So before filing, you’re going to need to pull together a ton of financial and other documents. Here’s a start: For regular financials, pull together your latest bank statements, brokerage account statements, and crypto wallets. Also your A/P, A/R, Profit and Loss Statement, Balance Sheet, Cash Flow Statement, and any tax returns. For fixed assets, pull together the deeds and titles of any real estate and vehicles you own, along with any leases, mortgages, loans, and vendor contacts. Gather together the documentation related to equity ownership and your formation docs. This will help in preparing financial decisions and let counsel file the case accurately. Your counsel needs these records to assemble a picture of your finances and figure out how a Chapter 11 reorganization can help, if it does at all. If not, your counsel can advise other options.

Voluntary Petition

Every case starts with the debtor filing a petition to begin the case. Everything flows from that moment, so to the greatest extent possible, the debtor must get that right. For a business debtor filing, that petition is Official Form 201, Voluntary Petition for Non-Individuals Filing for Bankruptcy. The petition simply seeks relief under Chapter 11, and the official form is required.

Next, the debtor files with the court a creditor matrix, often called the “creditor list” or simply the “matrix.” This is a list of the creditors who will get notice, and it gets filed with the petition. It must include every single creditor with their name and address, set out in the form required by the court. A complete and accurate list will save you headaches in the future.

The debtor must also file along with the petition a list of its 20 largest unsecured creditors (Form 204), leaving out insiders such as owners and executives, along with their claims. If you’ve already prepared your creditor matrix, this is as simple as pulling out the 20 largest unsecured claims.

If you’re a corporate debtor that’s required to file periodic reports with the SEC, you also file Form 201A, the attachment to the voluntary petition, with your initial filing.

A ”small business debtor” case has an entirely different character than an ordinary case. In general, you qualify as a small business debtor if you are engaged in business activity and have $3,424,000 or less in total secured and unsecured debt on the filing date. If you qualify, you are required to attach to the petition your most recent profit and loss statement, balance sheet, and cash flow statement, plus your latest federal tax return. If your business has no balance sheet, statement of operations, cash flow statement, or tax returns, you must file a statement under penalty of perjury saying so.

Schedules and a Statement of Financial Affairs

Every debtors’ most dreaded Chapter 11 documents are the statement of financial affairs and the various schedules. These break down your business in a level of detail that is intimidating. The schedules and statement of financial affairs set out your financial status. They show what you own, who you owe, and how much you own and owe.

Along with the petition, or within 14 days after it, the debtor files schedules and a statement of financial affairs.

• Schedule D, the debtor’s secured creditors.
• Schedule E/F, the debtor’s unsecured creditors.
• Schedule G, executory contracts and unexpired leases.
• Schedule H, the debtor’s co-obligors on a debt or contract.

The Summary of Assets and Liabilities (Form 206Sum) is a compilation of summary information from the debtor’s schedules, which the debtor calculates and provides to the court. The statement of financial affairs is a kind of snapshot of the debtor’s finances. For small business debtors, the court can set the time to complete all information to 30 days after the order for relief, and no later except in extraordinary and compelling circumstances. A lot goes into the statement of financial affairs, so be sure to leave yourself enough time to pull together the required information.

Within 14 days of the order for relief the debtor must file a list of equity security holders, grouped by class, unless the court orders otherwise. This list shows everyone with an equity interest in the debtor: shareholders, members of the LLC, and so on.

Filing Fee

Finally, the debtor pays a filing fee. As of now, the total court fee for a Chapter 11 case is $1,738, a $1,167 filing fee plus a $571 administrative fee. If you don’t pay the filing fee, the case can be dismissed. You must have the money.

This is only an overview, and a lot goes into these documents. Once your case gets going, you’ll have plenty of other deadlines and requirements. The whole point of Chapter 11 is a plan of reorganization, so a viable plan is essential. Chapter 11 can be very complex, so it’s always a good idea to consult with counsel.