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

A Chapter 11 case begins as a stack of paper, and the judge's first impression of the business is formed from that stack before anyone from the company speaks. Some of the documents must arrive with the petition. Others may follow within 14 days. A few are required only by local rule, which means the stack filed in Manhattan need not match the one filed in Phoenix.

The seven documents below are the ones the court expects at the start of a business Chapter 11 case, described by what each tells the reader on the other side of the bench. Preparing them is the work of bankruptcy counsel, whom the business must retain in any event.

1. The Petition Declares the Kind of Case Before It Declares Anything Else

Official Form 201, the "Voluntary Petition for Non-Individuals Filing for Bankruptcy," opens the case. It is four pages long and more revealing than its length suggests (it asks the debtor to classify itself as a health care business, single asset real estate, or one of several other regulated types, to supply a four-digit NAICS industry code, to disclose any bankruptcy cases filed by or against it in the last eight years, to predict whether any funds will be left for unsecured creditors after administrative expenses, and to estimate its number of creditors and the range of its assets and liabilities, all before reaching the signature lines). Item 8 records the chapter and, within Chapter 11, the boxes that matter most: whether the debtor is a small business debtor, whether it elects Subchapter V, whether a plan accompanies the petition, and whether acceptances were solicited before filing under section 1126(b).

Two signatures close the form: the authorized representative's, under penalty of perjury, and the attorney's, with a bar number. The fee paid with it is $1,738, made up of the $1,167 filing fee and the $571 administrative fee.

2. The List of the 20 Largest Unsecured Creditors Tells the U.S. Trustee Whom to Call

Bankruptcy Rule 1007(d) requires a voluntary Chapter 11 debtor to file, with the petition, "a list containing the names, addresses, and claims of the creditors that hold the 20 largest unsecured claims, excluding insiders," on Official Form 204. The Advisory Committee's note explains the purpose in one line: the list "is for the purpose of selecting a committee of unsecured creditors." The document is, in other words, a roster from which a committee may be drawn.

For a business carrying several merchant cash advances, a disproportionate share of the list may be funders. Whether a funder whose contract describes a purchase of receivables belongs on a list of unsecured creditors at all is a question the form does not resolve.

3. The Corporate Ownership Statement Answers a Narrow Question

Rule 1007(a)(1) requires a corporate debtor, unless it is a governmental unit, to include with its creditor list a statement identifying any parent corporation and any publicly held corporation owning 10% or more of its stock, or stating that none exists, and to supplement the statement promptly if circumstances change.

For most closely held businesses, it is the shortest document in the case.

4. The Resolution Is the Company's Credentials

Nothing in the Official Forms reproduces the board resolution or members' consent authorizing the filing, but the court will want to know it exists. In Price v. Gurney, the Supreme Court said that those who would put a corporation into bankruptcy "must present credentials to the bankruptcy court showing their authority," with that authority sourced in state law. The resolution should identify the chapter, the officer authorized to sign, and the counsel authorized to file, and it should predate the petition.

5. The Creditor Matrix Decides Who Receives Notice

The judiciary's filing instructions require, on the filing date, a list of the names and addresses of all creditors, "formatted as a mailing list according to instructions from the bankruptcy court in which the debtor files." Local courts set their own formats, and the clerk uses the matrix for the case's notices, including the notice of the meeting of creditors, which Bankruptcy Rule 2002(a)(1) requires be mailed at least 21 days in advance to the debtor, the trustee, and all creditors.

A matrix functions the way the guest list for a rehearsal dinner functions at a wedding with a contested seating chart: every omission is noticed later, by the person omitted. A creditor who never received notice of the case is positioned to argue about what the case did to its claim.

6. The First Day Declaration Tells the Story, Where the Local Rules Require One

No national rule requires a narrative affidavit, though local rules in some districts do. The Southern District of New York's Local Bankruptcy Rule 1007-2 provides that "in a voluntary chapter 11 case, the affidavit must accompany the petition," and it prescribes the contents: "the nature of the debtor's business and a concise statement of the circumstances leading to the debtor's filing under chapter 11," details of the 20 largest unsecured claims and the five largest secured claims, a summary of assets and liabilities, the premises from which the business operates, the location of its books and records, and "the nature and present status of each action or proceeding, pending or threatened, against the debtor or its property where a judgment against the debtor or a seizure of its property may be imminent."

If the business intends to keep operating, the same rule requires the affidavit to set out the estimated weekly payroll to employees for the 30 days after filing, the amounts to be paid in that period to officers, stockholders, directors, and any retained financial or business consultant, and a 30-day schedule of "estimated cash receipts and disbursements, net cash gain or loss, obligations and receivables expected to accrue but remain unpaid, other than professional fees."

What the rule is really asking for, beneath the enumerated items, is the account of how a business with customers and employees came to be standing in a courtroom, told by the person who ran it, in a sworn document that the judge will read before ruling on any request to use cash collateral or pay employees, that the creditors will read looking for inconsistencies with the schedules to come, and that the U.S. trustee may take up at the initial debtor interview, so that the declaration becomes, whatever its drafters intended, the baseline against which every later statement in the case is measured.

Courts outside New York differ on whether such a declaration is mandatory, and counsel will know the local practice.

7. The Schedules and the Statement of Financial Affairs Follow Within 14 Days

Rule 1007(c) permits the schedules of assets and liabilities, the schedule of executory contracts and unexpired leases, and the statement of financial affairs to be filed with the petition or within 14 days after it. A Chapter 11 debtor must also, under Rule 1007(a)(3), file a list of its equity security holders within 14 days of the order for relief. Each is signed under penalty of perjury on Official Form 202.

These documents carry most of the detail, and most of the risk. The deadline can be extended by the court. It is still 14 days.

Before the Stack Is Assembled

Every document above is prepared and filed by the company's bankruptcy counsel. Delancey Street has no role in a Chapter 11 filing; it negotiates business debt and is not a law firm. Its free, confidential initial review addresses an earlier question: whether a business's funder and lender balances might be restructured by agreement without a case, with independently licensed counsel engaged where the questions turn legal. A business with an imminent levy, a scheduled sale, or creditors who will not negotiate may need the stack more than the conversation.

Paper is how a court meets a business. The meeting goes better when the paper was written by people who knew the business before it needed a court.