Chapter 3 During the Case

• Jurisdiction: United States

Chapter 3: During the Case

I. The Initial Debtor Interview (IDI) and Meeting of Creditors

An individual debtor-in-possession is required to meet with the Office of the U.S. Trustee twice. The first meeting is typically held within 14 days of the filing of the case and called the "initial debtor interview" or "IDI." The IDI is ordinarily attended by the debtor-in-possession, debtor's counsel and an analyst. The purpose of the IDI is to review and discuss the chapter 11 operating guidelines (discussed in greater detail below).

The second meeting is the meeting of creditors, which is typically held within 30 days of filing the petition. The meeting of creditors is a public meeting where the debtor is questioned by the Office of the U.S. Trustee under oath. The debtor is typically asked about the facts and circumstances leading up to the bankruptcy filing, the extent and nature of the assets and debts, and the debtor's financial affairs, as well as how the debtor intends to exit from the bankruptcy. Creditors are also given an opportunity to ask the debtor questions about the bankruptcy and the debtor's financial affairs.

II. Documents to Be Provided to the Office of the U.S. Trustee

The debtor is required to provide the Office of the U.S. Trustee various documents in advance of the IDI and the meeting of creditors. These documents can include:

• financial statements;
• bank statements;
• individual tax returns for two years prior to the petition date, as well as the tax returns for any businesses in which the debtor is an owner;
• inventory (as applicable);
• rental property records (as applicable); and
• any other books and records relevant to the particular debtor.

The debtor does not have to create documents that do not exist. However, it is good practice to ask your potential debtor for all of these documents — and to review them — prior to filing a petition. While the decision to file a bankruptcy petition may not change as a result of the contents of the documents, they will at least provide data from which you as the attorney can spot potential issues in advance.

III. Operating Guidelines and Reporting Requirements

Individuals that file a chapter 11 petition are required to comply with the Operating Guidelines and Reporting Requirements for Debtors in Possession and Chapter 11 Trustees (the "Guidelines"). The Guidelines are issued by the Office of the U.S. Trustee and set forth how a debtor is to operate and report during the pendency of the case.

A. Bank Accounts

Pursuant to the Guidelines, all of the debtor's pre-petition bank accounts must be closed and new bank accounts must be opened that contain the notation "debtor-in-possession," along with the case number. If the debtor is a sole proprietor, the debtor must have separate accounts for business and personal income and expenses.

However, under certain circumstances, a debtor may obtain an exception from this general rule by either the Office of U.S. Trustee or the court. For example, if a debtor is married and resides in a state that provides an exemption for assets held jointly, the debtor should seek permission to keep jointly held bank accounts open.

B. Insurance

Individual chapter 11 debtors are required to obtain insurance coverage that is customary or prudent. Moreover, within 14 days of filing the petition, the debtor must provide proof of insurance coverage that provides the (1) effective and termination dates of the coverage, (2) type and limits of coverage, and (3) identity of all loss payees. In addition, the debtor must instruct the insurance company to list the Office of the U.S. Trustee as a certificate-holder. Examples of the types of insurance an individual debtor will likely need include general comprehensive, property (personalty and realty), flood, casualty and theft, and vehicle and renter's insurance (if debtor does not own a residence). If the debtor is a sole proprietor or owns a business, the debtor should also provide proof of...