By: Jamie L. Harris
Putting your company in Chapter 11 bankruptcy is far more complicated that just signing some paperwork. First, you need to evaluate if all your financials are accurate and up to date. You will want to get all tax returns timely filed and gather all your insurance certificates including workers comp. Depending on the size of your company you may want to issue a press release. At a minimum, you will want to have an informative session or other notice to employees. If you are going to seek court permission to pay prepetition employee wages, it is important for employee morale to understand that the corporate restructuring will not affect issuing regular payrolls. You will also want to reach out to key suppliers prior to filing to see if they will keep business terms the same after you file. If you have any critical vendors or suppliers and they are threatening to terminate the business relationship, those will need to be identified to see if you can obtain court approval to pay any of their prepetition debts.
Once the bankruptcy case is filed, all old bank accounts should be closed to open new debtor in possession bank accounts. Also, checks should be marked with a debtor-in-possession notation. The United States Trustee office will need to be listed as a notice party on your corporate insurance policies so the office can be notified of any insurance changes or termination. You will need to evaluate what professionals will be required to assist you in addition to your bankruptcy counsel. For example, your company may need the assistance of an outside accountant to complete the required monthly operating reports for a Chapter 11. An accountant may also be critical to assist with completing your plan projections. Creditors will rely on your plan projections in determine whether to vote in favor of the corporate reorganization plan. Other professionals that require employment and fee application include brokers, realtors, surveyors, and auctioneers. For more specifics on the requirements of Chapter 11 bankruptcy, you should consult with an attorney to determine what steps your company should take in order to successfully reorganize.