How to Search Business Bankruptcy Filings: 6 Public Records and What They Show

Bankruptcy filings are public records, like home sales. PACER (“Public Access to Court Electronic Records”) has allowed anyone to search bankruptcy filings (and other federal cases) online. You can find the filings in the federal courthouse where the debtor filed the case, or through PACER on the internet. In a business bankruptcy, you can make sense of the thousands of filings by focusing on six. Together, the documents show what the business owns, who it owes and the chronology of the case.

The papers are also a handy research aid if your business is struggling and you are considering a bankruptcy filing. If you run a business and want to see how a bankruptcy filing looks, search the court records or PACER for a recent Chapter 11.

Unless you know which court the debtor filed in, you must first identify the court with the PACER Case Locator. Type the company’s name in the box for “Party.” When you find the court, you can download documents through PACER for 10 cents a page (no fee if your bill stays at $30 or less in a quarter). The courthouse terminals are free. PACER discounts lengthy files. It limits the charge for docket sheets, creditor lists or registers of claims to $3 apiece, a break if the case is a long one.

The petition tells you who filed and under what chapter, which lets you anticipate what could happen in the case. The petition starts a case, so it also tells you whether the debtor did it voluntarily or the creditors forced it. When creditors force in a bankruptcy, it has a name, too: an involuntary petition. Three or more creditors usually must sign to force a case on the debtor, and they must be owed at least $21,050 in undisputed unsecured claims. The petition asks for more information than just the name, address, and contact. There is also a field for the debtor to give an NAICS code for its industry. If you are a supplier, you can also use the form to learn how your customers categorize their business.

If you are curious what a business owns, look to the schedules. The schedules show how much the company owes each creditor, and what it owns as assets. If you are checking up on your customers or suppliers, read their income and expense statement, and their list of current contracts and unexpired leases. Also use the statement of financial affairs, usually filed near the petition and schedules.

The list of 20 largest unsecured creditors is a way to get an idea of the largest creditors without reading all the schedules. In Chapter 11, insiders get left off the list. Each line names the creditor, the amount owed, what the debt is for and whether the claim is disputed. The panel of unsecured creditors can play a large role in the Chapter 11 case. It usually has seven members.

The claims register lists everyone who claims they are owed money, and what they say they are owed. The person or company claiming they are owed submits a proof of claim. The register lets you scan the creditors’ claims, to see if your debt is among them. If your debt is listed and not marked “disputed,” “contingent” or “unliquidated,” you don’t need to file a proof of claim to get paid under the plan. If a debtor misses you off the schedules, though, or you’re marked “disputed” “contingent” or “unliquidated,” then you generally must file a proof of claim to get paid and to vote on a Chapter 11 plan.

The docket lists everything filed since the start of the case, including petitions and motions. The docket is also the place to catch the debtor’s ever-changing finances. A business that files for Chapter 11 must keep the court and U.S. trustee updated on its business, through monthly operating reports. The plan and disclosure statement, if they come out, lay out the debtor’s assets and debts and describe what happens to them. If a case is likely to result in a plan being filed, look for the disclosure statement. To get creditors to approve, the statement must give them the information they need to vote. The court holds a hearing to decide whether the disclosures are sufficient, and whether they meet the standard of adequate information.

Open to the Public

If you are thinking about filing for your business, remember that its paperwork will be open to the public. Your creditors, suppliers, and competitors can all read the documents you file. Debtors can hide some business details by asking that the court seal records.

If instead you learn that a customer has filed bankruptcy, find the paperwork and make sure you are in it. The meeting of creditors, known as a “341 meeting,” usually comes between days 21 and 40. Claims in a voluntary Chapter 7 usually are due within 70 days of filing unless the court picks another deadline. First, attend the meeting of creditors. Next, move on to the claims register. Then, if you must, file a proof of claim.