CHAPTER 11 BANKRUPTCY AND MONTHLY REPORTS
One of the most important duties of a Chapter 11 Bankruptcy debtor is the duty to file monthly reports. The purpose of the monthly report is to show the creditors and the court what the debtor is doing. The fact is that the monthly report will often be what determines if the Court and/or creditors approve the plan of reorganization.
The monthly covers the preceding month and must be filed by the 20th of the following month. There is not a long time, but, the importance of the monthly report should not be underestimated. If the monthly report does not show an improving financial picture, your case my get dismissed. It is sometimes hard to show a profit in the early months of a Chapter 11 Bankruptcy case. In this event, the monthly report may need a little work to explain why the debtor’s situation is improving.
An example of this situation may be as simple as the debtor has to hire some additional employees or incur some extra expenses because it is getting ready to do more work. Maybe a new contract is just starting and the income is coming soon, but, the debtor must spend before it can receive the income.
If the debtor has something, in the works, that is not yet producing income, then put that in the notes. Maybe a big contract is starting in a couple of months or there is some other really good news that is not putting cash in the debtor’s pocket. Let the creditors, the Office of the United States Trustee and the Court see why your belief that things are getting better is reasonable.
Chapter 11 is not about hoping to do better or keeping on doing what you were doing. Chapter 11 is about what you are doing now and in the future so that the future of the debtor is better than the past of the debtor.