Chapter 19 Debtor Pre-Filing Checklist: Bank Issues

• Jurisdiction: United States

Chapter 19 Debtor Pre-Filing Checklist: Bank Issues

Note: This checklist addresses banking issues only and does not include other typical pre-bankruptcy activities such as reviewing leases and executory contracts, identifying assets for turnover, identifying potential voidable transfers, preparing cash-flow forecasts, etc. Consult bankruptcy professionals for a complete list.

[ ] 1. Obtain the company organization chart, and learn how the companies function together.

a. What does each company do?
b. Are any operational functions centralized?
c. Which companies have employees, own assets or have creditors?

[ ] 2. Learn how the company's cash-management system works.

a. Identify all accounts, where they are located, their types and any cash-management products attached to them.
b. Gather the debtor's deposit account, credit card and applicable treasury-management agreements.
c. Gather any applicable deposit account-control agreements.
d. Obtain or create a diagram of the cash-management system.

[ ] 3. Walk through the flow of funds, beginning with the accounts that are used to make payments, and work backwards. Flag potential issues such as:

a. How and when (day of week) is payroll funded/paid?
b. Are there collection accounts into which automated payments are made by third parties?
c. What automatic payments, if any, are made by the debtor?
d. Are there automatic payments between related companies as a part of the cash-management system?
e. Do any debtor funds pass through, or to, accounts of non-debtors?
f. Are any funds upstreamed to equity?
g. What disruptions could occur if a bank places a freeze or hold on any particular account upon learning of the bankruptcy filing?
h. What disruptions could occur by changing all accounts to DIP accounts?
i. Are there any accounts holding funds that do not belong to a debtor, such as trust funds, security deposits or employee benefits?

[ ] 4. Consider making changes to the company's cash-management system.

a. Can changes be made to the cash-management system before bankruptcy to eliminate or mitigate any of the issues identified above?
b. What is the bank's timetable for making changes?
c. Is the debtor bound by loan documents that prohibit opening new accounts or making other changes to the cash-management system without the secured creditor's consent?

[ ] 5. Investigate and consider important logistics.

a. How will payment of pre-petition checks and items be prevented?
b. Does the debtor's bank automatically

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