[Houston] [Corpus Christi] [San Antonio] [Austin]
GUIDELINES FOR DEBTORS-IN-POSSESSION
The
United States Trustee is responsible for supervising the administration
of cases under chapters 7, 11, 12, and 13 of the United States Bankruptcy
Code. 28 U.S.C. ' 586. To fulfill
this responsibility, the United States Trustee has issued these Guidelines
for Debtors-in-Possession. These
Guidelines impose certain administrative and reporting responsibilities
on chapter 11 debtors-in-possession. In addition, there are other requirements imposed
by law, including a requirement to pay United States Trustee quarterly
fees. The United States Trustee=s staff is available to assist debtors-in-possession
in fulfilling these requirements. In
addition, it is frequently necessary for members of the United States
Trustee=s staff to contact debtors concerning missing documents,
incomplete forms, and other administrative matters. Many debtors-in-possession and attorneys prefer
that these administrative matters be handled directly between the debtor
and the United States Trustee=s staff. Others
prefer that all such contacts be made through counsel. The separately enclosed form, Direction of
Attorney For the Debtor Concerning Contacts with Client Regarding Administrative
Matters, should be carefully reviewed with your attorney who should
sign the form authorizing how contacts on administrative matters will
be handled.
I. GENERAL REQUIREMENTS
A. The Debtor in Possession ("Debtor")
is required to comply in all respects with the Bankruptcy Code, Federal
Rules of Bankruptcy Procedure ("FRBP"), and applicable Local
Rules.
B. The Debtor must pay all obligations arising
after the filing of the petition ("post-petition") in full
when due. This includes not only
general business expenses, but all post-petition obligations including
but not limited to:
1. Wages;
2. FICA, both employee and employer share;
3. Tax deposits withheld from wages;
4. Federal and State employment taxes;
5. Sales tax;
6. United States Trustee Quarterly Fees;
and
7. Any other taxes (ad valorem, property
etc.).
C. The Debtor is prohibited from paying
pre-petition obligations except as allowed by the Bankruptcy Code or
by order of the Court.
D. The Debtor shall file all federal, state
and local tax returns when due, or shall procure an extension from the
appropriate taxing authority, unless otherwise provided by the Bankruptcy
Code or by order of the court. All
post-petition taxes are to be paid timely.
E. No assets may be sold or disposed
of, other than in the ordinary course of business, except as allowed
by and upon compliance with 11 U.S.C. ' 363 and the FRBP governing sales.
F. The Debtor may not pay any professionals
without Court Order. Applications
for employment of professionals must be submitted to and approved by
the court prior to rendering of any service by such persons.
Further, applications for compensation of professionals must
be submitted to and approved by the Court prior to any payment
by the Debtor to such professional. Applications for employment and compensation
of professionals must be served upon the United States Trustee.
G. Section 363(c)(2) of the Bankruptcy Code
provides that the Debtor may not use cash collateral without the consent
of the secured creditor or the approval of the court.
Any application for use of cash collateral or approval of a cash
collateral agreement must comply with FRBP 4001 and must be served upon
the United States Trustee.
H. The Debtor may not obtain credit or incur
secured or unsecured debt other than in the ordinary course of business. The Debtor must comply with section 364 of the
Bankruptcy Code and FRBP 4001. All
applications must be served upon the United States Trustee.
I. The Debtor must provide the United States
Trustee with a current and fully accurate address and phone number of
the Debtor, debtor's counsel, responsible individual, and responsible
financial individual. Any change
of address or phone number must be reported to the United States Trustee
immediately.
II. INSURANCE REQUIREMENTS
A. All debtors must maintain insurance
and make all premium payments thereon when due. The United States Trustee is to be identified
as a party to be notified of any change, cancellation, or expiration
of each policy. A 10-day advance
notice is the minimum requirement. However,
30 days should be requested of the insurance company.
B. Unless the United States Trustee otherwise
directs, or a waiver of these requirements is obtained from the court
the Debtor must maintain insurance customary in the Debtor's business
as well as the following:
1. If the Debtor has tangible assets susceptible
to casualty loss (fire, weather, theft, vandalism, etc.), casualty insurance
must be maintained;
2. If the Debtor has employees, workers'
compensation insurance, or sufficient equivalent coverage, must be maintained,
unless the Debtor obtains an order of the court waiving this requirement;
3. If the Debtor conducts business operations,
general liability and, if appropriate, product liability insurance must
be maintained.
C. The United States Trustee's office must
be provided with proof that the required insurance is being maintained
throughout the pendency of the chapter 11 case.
To fulfill this requirement the United States Trustee must be
provided a copy of a Certificate of Insurance from the Debtor's insurance
agent(s) or a copy of the first page of the insurance policy if it indicates
the expiration date of the policy.
D. Should an insurance policy expire during
the pendency of the chapter 11 case, upon expiration, termination, or
renewal of any coverage, the Debtor shall immediately provide
the United States Trustee with adequate proof of renewal or replacement
coverage.
III. INFORMATION REGARDING BANK ACCOUNTS
A. The Debtor shall immediately upon
the filing of the petition close any bank account over which the Debtor
has possession or control at the time of filing.
B. The Debtor shall immediately open
new Debtor bank accounts at a depository approved by the United States
Trustee. The new accounts are
the Operating Account and, if payroll or other taxes are an issue for
the Debtor, the Tax Account. If
required by Court order, a separate cash collateral account must
be established and maintained. If
the Debtor has a separate payroll account pre-petition, this account
should also be closed and a new payroll account should be opened.
The Debtor must have Court approval for any request for
an exemption to the United States Trustee=s policy regarding the use of a depository not approved
by the United States Trustee.
C. The Debtor shall insure that the depository
imprints the full name of the Debtor, including any d/b/a's, the designation
"Debtor in Possession" (not D.I.P.), and the Debtor's bankruptcy
case number on all permanent checks used for the new bank accounts.
The Debtor must type or print all of the foregoing information
on temporary checks. The new account signature cards shall clearly
indicate that the Debtor is a "Chapter 11 Debtor in Possession"
and show the bankruptcy case number.
D. The Debtor must deposit all receipts and
make all disbursements only through the approved Debtor in Possession
account(s). Any funds in excess of that required for current
operations must be maintained in an interest-bearing account.
E. The Debtor shall deposit to the Tax Account
sufficient funds to pay any tax liability (when incurred) associated
with the Debtor's payroll.
F. All funds held by the bankruptcy estate
must be deposited into an account with a financial institution that
agrees to comply with the requirements of the United States Trustee
and is an authorized depository approved by the United States Trustee. The Debtor-in-Possession Accounts in the approved
depository will be monitored by the United States Trustee and will not
exceed the insured or collateralized limits of that approved depository. A copy of the list of the Approved Depositories
may be obtained from the United States Trustee's office.
G. The Debtor may be requested to provide
copies of bank statements for pre-petition bank accounts and/or post-petition
debtor-in-possession bank accounts.
Additionally, as part of its responsibilities under 28 U.S.C.
'586, the United States Trustee may request copies of
supporting documentation for transactions disclosed in the bank statements.
If the bank statements or supporting documentation, e.g., deposit
slips, cancelled checks, are not available to the Debtor, the Debtor
agrees to provide consent for the United States Trustee to request copies
of bank statements and/or supporting documentation directly from the
Debtor=s financial institution(s).
IV. LISTS
OF CREDITORS, SCHEDULES AND STATEMENT OF AFFAIRS
A. The Debtor must comply fully with FRBP
1002, l007 and 2015 and applicable Local Rules regarding the filing
of schedules and statements of financial affairs.
Either the schedules or a complete list of all of the creditors
(including their addresses) and complete description of assets must
be filed with your petition.
B. Pursuant to FRBP 1007(d), you must also
file a list containing the name, address, phone number and amount of
claims of your twenty (20) largest unsecured creditors. This list should not contain the names of any
creditors who are "insiders" as that term is defined in ' 101(31) of the Bankruptcy Code.
C. Pursuant to applicable Local Rules, Debtors
are required to provide the Clerk of the Bankruptcy Court with, proper
mailing cards/matrix for notification of all creditors.
V. INITIAL REPORT
A. The "Initial Report" is required
and must be submitted to the United States Trustee no later than five
(5) days prior to the Initial Debtor Conference (AIDC@). The "Initial
Report" should not be filed with the Clerk of the Bankruptcy
Court.
B. The Debtor is required to submit the following
documents with the Initial Report:
1. Proof of the establishment of new Debtor
in Possession bank accounts;
(a) Operating Account;
(b)
Tax
Account (if payroll or other taxes are an issue for the Debtor); and
(c)
Any
other necessary accounts, such as Payroll Account, Cash Collateral Account(s).
2. Completed declaration
under penalty of perjury from the Debtor verifying the closing of all
pre-petition bank accounts and stating the date each account was closed
and that all monies were transferred to the new Debtor in Possession
bank accounts (form enclosed).
3. Completed Insurance
Statement (form enclosed) and proof of the following insurance coverage:
(a) General comprehensive
public liability;
(b) Fire and theft;
(c) Workers' compensation;
(d) Vehicle;
(e) Product liability;
and
(f) Any other
coverage customary in the Debtor's business.
4. Federal Income
Tax Returns for the last three (3) years and State Sales Tax Returns
for the last three (3) months. You must also provide our office with
a copy of any Federal Income Tax Return or extension filed during the
pendency of your Chapter 11 case. You may be asked to provide copies
of Personal and Real Property Tax statements for the last three (3)
years
5. Financial statements,
audited as well as unaudited, including, but not limited to, profit
and loss statements, inventory statements, balance sheets and tax reconciliations
for the last three (3) years.
6. Completed projected
ninety (90) day profit and loss statement (form enclosed).
7. If a debtor
in possession is a corporation, a copy of a corporate resolution
authorizing the filing of the Chapter 11 petition and designating an
individual to sign pleadings.
8. If a debtor
in possession is a partnership, a copy of the written agreement
to the filing of the bankruptcy case signed by all partners, or by all
general partners if the debtor in possession is a limited partnership.
VI. CREDITORS MEETINGS
A. Section 341(a)
of the Bankruptcy Code requires a meeting of creditors in each case.
Notice of the meeting is sent to all creditors.
A representative of the Debtor and the counsel for the Debtor
are required to attend. The Debtor's representative should have knowledge
of and be familiar with the operation of the Debtor's business and the
bankruptcy proceeding. In addition,
the financial person for the Debtor should be available for examination
at the creditor's meeting.
B. For individual
Debtors in a joint case, both Debtors should be present to testify at
the creditor meeting. If the
Debtor's first monthly operating report is due prior to the creditor's
meeting, the Debtor must file the operating report(s) and send a copy
to the United States Trustee by the due date.
C. After notice
of the creditor's meeting has been mailed, meetings cannot be canceled
or rescheduled to accommodate conflicts with the schedules. If a creditor's meeting must be rescheduled,
Debtor's counsel or his representative must appear at the scheduled
meeting and request that the meeting be rescheduled.
D. If the request
is approved, the Debtor's counsel must file a Certificate of Service
with the court that notice of the rescheduled meeting has been sent
to all parties in interest by the Debtor.
The Debtor may be responsible for costs and expenses associated
with the rescheduling.
E. The United
States Trustee or a member of the staff will preside at the creditor's
meeting, administer the oaths, and examine the Debtor and/or other appropriate
person(s). The meeting will be
recorded on audio tape and will be retained five (5) years, at which
time the tapes will be erased.
F. Requests for
copies of tapes must be made in writing to the United States Trustee. The request must include: case name, case number,
district, the date of the meeting of creditors and two (2) blank 90-minute
cassette tapes or other appropriate media as directed by the United
States Trustee
VII. OPERATING REPORTS
A. Pursuant to
FRBP 2015, the Debtor must file monthly operating reports with the Clerk
of the Bankruptcy Court and must serve a copy upon the
United States Trustee, the chairman of any committee appointed in the
case, and any governmental unit charged with the responsibility for
collection or determination of any tax arising out of the debtor=s operations (IRS, State Comptroller,
Texas Work Force Commission, etc.). All
operating reports must be filed no later than the twentieth (20th) day
of the month following the end of the month covered by the report. The Debtor must file a report every month using
the reporting forms designated by the United States Trustee. The Debtor will not be required to file monthly
operating reports once the case has been dismissed or converted.
B. In the past,
the United States Trustee has instructed the Debtor not to file monthly
operating reports after a plan has been confirmed in a case. However, in order to effectuate Public Law Number
104-99 enacted by Congress on January 27, 1996, the United States Trustee
is now requiring a Debtor to file quarterly post-confirmation reports
until the Court has entered an order closing this case. The post-confirmation reports must be filed
no later than the twentieth (20th) day of the month following the end
of the quarter covered by the report.
VIII. QUARTERLY FEES
A. Debtors are
required to pay a quarterly fee to the United States Trustee pursuant
to 28 U.S.C. ' l930(a)(6). Quarterly fees must be paid for every calendar
quarter, or a part of a quarter, in which the chapter 11 case is pending
until the date of entry of an order closing, dismissing or converting
the case. If a case is pending
as a chapter 11 case for even one day during a quarter, payment of the
fee for that quarter is required.
B. If a chapter
11 case has been jointly administered with another case or has been
consolidated with another case for administrative purposes only, quarterly
fees will accrue for both cases and the Debtor is responsible for the
payment of the quarterly fees assessed in each of the individual cases. If the court has ordered the case to be substantively
consolidated (consolidated for all purposes), then quarterly fees will
only accrue in the main case number.
However, the Debtor is responsible for the payment of quarterly
fees accrued in each of the individual cases prior to the entry of the
order of consolidation.
C. The amount
of the quarterly fee depends upon the dollar amount of the Debtor's
disbursements during each calendar quarter.
A minimum fee of $325.00 is due each quarter even if no disbursements
are made during that quarter. The
fee amounts are as follows:
Total Quarterly Disbursement |
|
Quarterly Fee |
Less than |
|
|
|
$15,000.00 |
|
$ 325
|
$15,000 |
|
to |
|
74,999.99 |
|
650
|
75,000 |
|
to |
|
149,999.99 |
|
975
|
150,000 |
|
to |
|
224,999.99 |
|
1,625
|
225,000 |
|
to |
|
299,999.99 |
|
1,950
|
300,000 |
|
to |
|
999,999.99 |
|
4,875
|
1,000,000 |
|
to |
|
1,999,999.99 |
|
6,500
|
2,000,000 |
|
to |
|
2,999,999.99 |
|
9,750
|
3,000,000 |
|
to |
|
4,999,999.99 |
|
10,400
|
5,000,000
|
|
|
|
14,999,999.99 |
|
13,000
|
15,000,000
|
|
|
|
29,999,999.99 |
|
20,000
|
30,000,000
|
|
|
|
Or more |
|
30,000
|
Fees are to be paid according to the following Schedule:
|
|
|
|
|
|
Due Date for Payment |
1st Quarter |
|
Jan-Feb-Mar |
|
Mar. 31 |
|
April 30 |
2nd Quarter |
|
April-May-June |
|
June 30 |
|
July 31 |
3rd Quarter |
|
July-Aug-Sept |
|
Sept 30 |
|
Oct. 31 |
4th Quarter |
|
Oct-Nov-Dec |
|
Dec. 31 |
|
Jan. 31 |
D. Pursuant to
' 1129(a)(12) of the Bankruptcy Code,
a plan of reorganization must provide for payment of all unpaid quarterly
fees as of its effective date, or it cannot be confirmed. Failure to include provisions for payment of
post-confirmation quarterly fees in the Plan, will result in the United
States Trustee filing objections to confirmation of the Plan. The following
language is a sample quarterly fee provision for inclusion in a disclosure
statement, plan of reorganization, and confirmation order:
The debtor will pay pre-confirmation
fees owed to the U. S. Trustee on or before the effective date of the
plan. After confirmation, the
reorganized debtor [Debtor/Plan Proponent] will file with the court
and serve on the U. S. Trustee quarterly financial reports in a format
prescribed by the U. S. Trustee, and the Debtor [Debtor/Plan Proponent]
will pay post-confirmation quarterly fees to the U. S. Trustee until
a final decree is entered or the case is converted or dismissed.
28 U.S.C. ' 1930(a)(6).
E. Each Debtor
will receive a statement regarding the fee prior to each of the due
dates. Each statement contains a payment stub which
must be returned along with the Debtor's check made payable to AUnited States Trustee" to the following address: United States Trustee, P.O. Box 70937; Charlotte, NC 28272-0937. The
Debtor's account number, (obtained from the statement or by contacting
the United States Trustee's Office) should be written on the face of
the check. Failure to include
either the statement or the UST Form 11-A with your payment, will result
in the payment center being unable to properly apply your payment. If you do not receive the proper form or a bill,
contact the United States Trustee=s Office.
F. Please Remember
That the United States Trustee Payment Center Only Processes Your Quarterly
Fee Payments and Is Not an Office of the United States Trustee. The Address Given Is a Lock Box at a Bank.
Therefore, Please Forward Only the Statement Stub or the UST
11-A Form with Your Check to the Payment Center. This Address May Not Be Used for Service of
Process, Correspondence, or for Any Purpose Other than Payment of Quarterly
Fees.
G. If a check
is returned for insufficient funds, all future quarterly fee payments
must be made by cashier's check, certified funds, or money order.
H. If the case
is converted to a proceeding under chapter 7, 12, or 13 of the Bankruptcy
Code, quarterly fees will nevertheless be required for the period the
case was pending as a chapter 11 through the date the order of conversion
is entered. After conversion,
the Debtor will be required to file a schedule of unpaid obligations
incurred after the commencement of the chapter 11 case, pursuant to
' 348(d) of the Bankruptcy Code and
FRBP 1019(5)(A)(i), including accrued United States Trustee quarterly
fees, considered administrative expenses under 11 U.S.C. ' 503(b).
I. The United
States Trustee will oppose dismissal unless the dismissal order includes
provision for payment of unpaid quarterly fees with language substantially
similar to that set forth below.
ORDERED that the Debtor in Possession
shall pay to the United States Trustee the appropriate sum required
pursuant to 28 U.S.C. ' 1930(a)(6) within ten (10) days from
the entry of this Order and provide the United States Trustee an appropriate
affidavit indicating the cash disbursements for the relevant period(s).
The Court shall retain jurisdiction to enforce the payment of
these fees.
K. Failure
to Pay the Quarterly Fee Is Cause for Conversion or Dismissal of a Chapter
11 Case under ' 1112(b)(10) of the Bankruptcy Code.
Anyone Filing a False Report Will Be Subjected to Civil Liability
under 31 U.S.C. ' 3729(a)(7) and to Criminal Penalties
under 18 U.S.C.' 1001 and 19 U.S.C.' 1621. Further, the United States Trustee Intends to
Use the Debtor=s Taxpayer Identifying Number for the
Purpose of Collecting and Reporting Delinquent Quarterly Fees to the
Department of Treasury Pursuant to the Debt Collection Improvements
Act of 1996. Public Law 104-134,
31 U.S.C. '' 3701, et Seq., Amended
31 U.S.C. '' 3701-3720. See Notice Enclosed.
The United States Trustee May Take Such Other Steps, as Allowed
by Law, to Collect Delinquent Quarterly Fees, Including Referral of
the Debt to the Department of the Treasury, or Other Agencies, for Collection.
IX. OTHER REGULATORY AGENCY REPORTING
A. If the Debtor
has 100 or more employees and benefit plan assets in excess of $1,000,000
or has participant claim issues, the Debtor must complete and submit
the U.S. Department of Labor (ADOL@) Questionnaire. Debtors that have
a company sponsored group health/dental/pension plan are reviewed with
respect to the DOL Questionnaire.
B. If the Debtor
is required to file periodic reports (e.g., forms 10K and 10Q) with
the Securities and Exchange Commission pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934 and is requesting relief under
chapter 11 of the Bankruptcy Code, then Exhibit A to the Voluntary Petition
must have been completed and filed with the Voluntary Petition.
C. If, to the
best of the Debtor=s knowledge, the Debtor owns or has
possession of property that poses or is alleged to pose a threat of
imminent and identifiable harm to the public health or safety, then
Exhibit C to the Voluntary Petition must have been completed and filed
with the Voluntary Petition and a response must have been provided to
Form 7 Statement of Financial Affairs, question no. 17.
If the Debtor has not done so, the Debtor is required to report
this information to the Environmental Protection Agency.
X. NOTICE REQUIREMENTS ON UNITED STATES TRUSTEE
Notices
and copies of pleadings must be served on the United States Trustee
as required by FRBP 1007, 1009, 2002(a)(2), (5), (7), 2002(b), 2002(f),
2014, 2015, 2016 and applicable Local Rules.
XI. EFFECT OF NON COMPLIANCE
Failure
to comply with the United States Trustee Guidelines, including timely
filing of operating reports, may result in conversion, dismissal, or
other appropriate relief.
GOVERNMENTAL
TAXING AUTHORITY ADDRESSES FOR MONTHLY OPERATING REPORTS: (Not Including Local Authorities):
Texas Workforce Commission
P.O. Box 149080
Austin, Texas 78714-9080
Texas Comptroller of Public Accounts
Revenue Accounting Division
Bankruptcy Section
P.O. Box 13528
Austin, Texas 78711-3528
For
cases filed in the Western District of Texas, Austin, Waco, El Paso
and Midland Divisions:
Internal Revenue Service
STOP #5022AUS
300 E. 8th St.
Austin, Texas 78701
For cases filed in the Southern District of Texas, Corpus
Christi, Brownsville, Laredo, McAllen and Victoria Divisions and the
Western District of Texas, San Antonio Division:
Internal Revenue Service
STOP #5026AUS
300 E. 8th St.
Austin, Texas 78701
For cases filed in the Southern District of Texas, Houston
and Galveston Divisions:
Insolvency Group
Internal Revenue Service
1919 Smith Street
STOP 5022 HOU
Houston, TX 77002
THE UNITED STATES TRUSTEE MAY MODIFY,
OR AMEND THESE GUIDELINES AND REQUIREMENTS FROM TIME TO TIME, AND AS
IS APPROPRIATE IN AN INDIVIDUAL CASE.
QUESTIONS CONCERNING THESE REQUIREMENTS MAY BE DIRECTED TO UNITED
STATES TRUSTEE=S OFFICE FOR REGION 7 AT THE FOLLOWING
ADDRESSES:
SOUTHERN DISTRICT:
Houston, Galveston, Laredo and Victoria Divisions:
United States Trustee=s Office
515 Rusk, Suite 3516
Houston, Texas 77002
Tel: 713-718-4650
Corpus Christi, Brownsville, and McAllen Divisions:
United States Trustee=s Office
606 N. Carancahua, Suite 1107
Corpus Christi, Texas
78476
Tel: 361-888-3261
WESTERN DISTRICT:
San Antonio, El Paso and Midland Divisions:
United States Trustee=s Office
P.O. Box 1539
San Antonio, Texas 78295-1539
Tel: 210-472-4640
Austin and Waco Divisions:
United States Trustee=s Office
903 San Jacinto, Suite 230
Austin, Texas 78701
Tel: 512-916-5328
CHARLES F. McVAY
UNITED STATES TRUSTEE
REGION 7
Last Updated on
Wednesday, February 27, 2008 5:31 PM
U.S. Trustee Program/Department of Justice
usdoj/ust/smm