Assistant United States Trustee, Region 11
The U.S. Trustee Program’s (USTP) rule entitled Uniform Periodic Reports in Cases Filed Under Chapter 11 of Title 11 (Final Rule) became effective on June 21, 2021, and provided for the filing of a single Monthly Operating Report and a single Post-Confirmation Report in non-small business Chapter 11 cases. This article highlights key benefits of the two reports, provides an update on enhancements made to the reporting process since June 2021, and shares important practice tips.
The New Reports
To help bankruptcy professionals transition to the new Monthly Operating Reports (MORs) and Post-Confirmation Reports (PCRs), USTP staff provided training nationwide on how to complete, finalize, and file the new forms. In July 2021, the first new forms were filed, and since then bankruptcy professionals have filed thousands of MORs and PCRs with bankruptcy courts across the country. The bankruptcy community appears to have made a smooth transition to reporting under the Final Rule. The success of the transition is a credit to the bankruptcy community and reflects the shared and ongoing commitment to greater transparency and efficiency in the bankruptcy system.
Benefits of the New Reports
In addition to the uniformity and consistency provided by having a single MOR and PCR for use in every non-small business Chapter 11 case, the updated forms confer several other new and important benefits.
Modernization: The new MORs and PCRs represent a significant advance in Chapter 11 periodic reporting. The data-embedded “smart forms” allow users to enter and save data in interactive, fillable PDF forms. Plus, with embedded data, the forms offer enhanced searching and extraction capabilities. To simplify data extraction, the forms employ standard barcode technology used widely across government and industry, such as on postage stamps, RealID driver licenses, common carrier shipping labels, and boarding passes issued by commercial airlines. To enhance the user experience with periodic reporting, the USTP introduced MORs and PCRs that are compatible with Windows and Mac operating systems.
Simplicity: The MOR and PCR forms contain easy to understand questions and are accompanied by clear and concise instructions that guide filers through the steps required to complete, save, and finalize reports for filing with bankruptcy courts on CM/ECF.
Transparency: Transparency is a vital pillar of the bankruptcy system. To advance that important interest, the Final Rule requires that MORs and PCRs be filed with bankruptcy courts on CM/ECF. Prior to the effective date, there was no universal filing requirement. Publicly accessible reports promote transparency by providing non-party stakeholders—including members of Congress, the public, academics, and the press—access to information across cases and districts. With greater access to data summarizing Chapter 11 debtors’ post-petition operations, stakeholders can more effectively analyze and report on the operational results of the bankruptcy system.
Enhancements to the Reporting Process
The Final Rule, new forms, and accompanying instructions are the byproduct of the USTP’s collaboration with numerous stakeholders in the bankruptcy system, both before and after the effective date. In response to internal and external stakeholder feedback, the USTP acted quickly to implement certain items that already have enhanced the reporting process. Some key examples follow.
The USTP recognized the need for an efficient and effective way to share important information about periodic reporting with stakeholders across the country. To fulfill that need, the USTP created the “Chapter 11 Operating Reports Email Updates” feature on its website. Presently, almost 1,000 stakeholders nationwide have enrolled to receive email updates from the USTP about periodic reporting. Recent updates were provided in late 2022, when the USTP: (i) announced that updated instructions for MORs and PCRs were posted on its website for immediate use; and (ii) explained how to avoid a mismatch between data reflected on the face of a form and the data embedded in the barcodes by highlighting the need to generate new barcodes any time a report is edited after the “Generate PDF for Court Filing and Remove Watermark” step has been completed.
In December 2021 (about six months after the effective date of the Final Rule), the USTP incorporated barcode technology into the MOR and PCR forms. The barcodes contain the embedded data reflected on the face of the forms, and they provide visual confirmation that the forms have been finalized properly for filing with the bankruptcy court on CM/ECF. Specifically, the presence of barcodes signifies that each field on the form has been completed and that the forms’ data embedded features have been activated properly, thereby preventing the filing of incomplete or flattened forms. The barcodes are generated at the end of the forms automatically after filers complete the “Generate PDF for Court Filing and Remove Watermark” step. Additionally, the barcodes further the Congressional mandate in the Bankruptcy Abuse Prevention and Consumer Protection Act that the new forms “facilitate compilation of data” and maximize public access to the data contained on the forms by providing parties-in-interest, the public, academics, and the press an efficient means of aggregating data from a high volume of reports filed across the country.
The USTP has also helped several national financial advisory firms transition to reporting under the Final Rule. These firms routinely represent hundreds of debtors in large cases across the country. In addition to answering substantive, procedural, and technical questions through ongoing discussions, the USTP provided schema and data dictionaries for the MORs and PCRs to help the firms design electronic tools to expedite the process of populating individual reports for debtors in large jointly administered Chapter 11 cases. During the ongoing collaboration, the USTP also tested numerous forms prepared by the firms to ensure that their respective methods successfully embedded data in the new forms.
In response to stakeholder feedback received since the effective date, the USTP issued updated Instructions for both the MOR and PCR forms in December 2022. With several substantive, procedural, and technical revisions, the updated Instructions help clarify certain questions raised by stakeholders. The updated Instructions are available on the USTP’s website.
An important feature of the USTP’s commitment to efficiency in the reporting process is the on-demand technical support that it provides to all stakeholders. In addition to offering user-friendly “Troubleshooting Tips” on its website, the USTP provides email access to a team dedicated to responding to technical inquiries related to MORs and PCRs. By emailing inquiries to [email protected], stakeholders can obtain individualized assistance when the need arises. The USTP immediately acknowledges receipt of every email with an automated response that provides troubleshooting tips addressing many commonly asked questions. Quite often stakeholders quickly reply to the automated response indicating that it was all they needed to resolve their inquiry. For instance, one of the most common inquiries involves stakeholders using the prior version of the forms that were deactivated and removed from the USTP’s website in December 2021. Once directed to the active forms on the USTP’s website and provided a hyperlink for quick access, those inquiries are resolved. If these common answers do not resolve the issue, a USTP representative contacts the inquirer directly to work out a solution. Since the effective date in June 2021, the USTP team has successfully resolved hundreds of inquiries from across the country.
On the rare occasion when inquiries are too complex to be resolved by email, the USTP team engages with stakeholders telephonically or by video conference. In one recent instance, a debtor’s counsel had difficulty generating barcodes on an MOR despite using the correct version of the form and following the instructions step by step. To ensure that the forms could be finalized and filed prior to the impending deadline, two members of the USTP team immediately video-conferenced with counsel, working together for an hour. During that time, the USTP team not only diagnosed and corrected the problem—an incorrect default computer setting—but ensured that counsel understood how to finalize and file forms on their own. Since then, counsel has continued to file forms without the need for further USTP assistance.
Whether substantive, procedural, or technological, the post–effective date enhancements will continue to promote the efficiency and transparency of the reporting process.