Bankruptcy Monthly Operating Reports: What Is Involved, and Do You Need a CPA?

If your company has filed Chapter 11, you now have a new monthly deadline that does not move. The monthly operating report — the MOR — is how the court and the U.S. Trustee watch whether the business is actually viable while it reorganises. Miss enough of them and the case can be converted or thrown out.

What a monthly operating report is

A monthly operating report is a sworn financial report filed with the bankruptcy court every month while a Chapter 11 case is open. It is not an internal management pack and it is not a tax return. It is the record the U.S. Trustee uses to judge whether the debtor is operating within the rules, paying post-petition obligations, and generating enough cash to support a plan.

The reports are governed by 28 CFR 58.8, issued under 28 U.S.C. 589b. Before June 2021 there were more than 150 different local MOR formats across the country. They were replaced with a single national form.

Which form you file — this is where people go wrong

There is no one MOR. Which form applies depends on what kind of Chapter 11 debtor you are.

• UST Form 11-MOR — Chapter 11 debtors who are not small business debtors under 11 U.S.C. 101(51D). This is the form the 2021 rule standardised.
• Official Form 425C — small business debtors and Subchapter V debtors. These are explicitly outside the final rule and use the Judicial Conference form instead.
• UST Form 11-PCR — the post-confirmation report. Once a plan takes effect, monthly reporting stops and quarterly post-confirmation reporting begins.

Chapter 7 does not involve an MOR — a trustee takes over the estate. Chapter 13 generally does not either, unless the debtor is operating a business and the court orders reporting.

When it is due

Unless a local rule says otherwise, each MOR is due by the 21st day of the month following the reporting period. Some districts set a different day, so the local rule and any case-specific order govern. The post-confirmation report follows the same pattern quarterly, due the 21st day after the quarter ends.

Monthly filing continues until one of three things happens: the effective date of a confirmed plan, conversion to another chapter, or dismissal of the case.

What the report has to contain

The rule lists sixteen categories. In practice they group into five questions the U.S. Trustee is asking:

Is the business actually operating?

Industry classification, how long the case has been pending, full-time employee count both at the order for relief and at the end of the period, cash receipts and disbursements, profitability for the period and cumulatively, and an income statement.

What does the estate own and owe?

Asset and liability status at period end, plus anything sold or transferred outside the ordinary course of business — with or without court approval — during the period and cumulatively.

Is the debtor staying current on new obligations?

Whether tax returns have been filed and tax payments made since the order for relief, and insurance status covering workers’ compensation, casualty and property, and general liability.

Is money going anywhere it should not?

Payments made on pre-petition debt, payments outside the ordinary course without court approval, payments to or on behalf of insiders, post-petition borrowing, and all court-approved professional fees. Professional fees must be split between those that would have been incurred anyway and those that exist only because of the bankruptcy.

Is the case moving?

Whether a disclosure statement and plan have been filed, and whether quarterly U.S. Trustee fees have been paid. Individual Chapter 11 debtors complete an additional part covering personal income, expenses, past-due post-petition debts, and domestic support obligations.

The supporting documents — where the bookkeeping actually lives

The form itself is a summary. The work sits in the attachments. Three are required of non-individual debtors:

• Statement of cash receipts and disbursements covering all bank and investment accounts — not just the operating account.
• Balance sheet in which pre-petition liabilities and retained earnings are reported separately from post-petition liabilities and retained earnings.
• Statement of operations comparing actual performance against projected performance.

Beyond those, the U.S. Trustee can require accounts receivable aging, aged post-petition liabilities split by payables, professionals and taxes, a statement of capital assets showing book values and movements, schedules of payments to professionals and to insiders, asset sale descriptions, disbursement registers, a cash flow statement, and — the one that catches people — bank statements and bank reconciliations for every account.

That last requirement is the reason a Chapter 11 case is so unforgiving of loose bookkeeping. If your accounts were not being reconciled monthly before the filing, they have to be now, every month, on a court deadline.

Does a monthly operating report require a CPA?

No. The rule says the report must be certified under penalty of perjury as true and correct by “an individual who is authorized under applicable law to certify on behalf of the debtor.” That is an officer, member, partner or other responsible party — the person who can bind the company. It is not a CPA, and no accountant’s signature, review or audit is called for anywhere in the rule.

What the rule does require is an accounting standard. Reports must generally be prepared using GAAP, unless the debtor used a different framework before filing or the U.S. Trustee or the court modifies that requirement. Where GAAP applies, supporting documents are expected to comply with it, including ASC 852, Reorganizations, which governs how a company in Chapter 11 presents reorganisation items.

So the honest answer to “do I need a CPA” is: not to sign it, and not as a matter of law. What you need is someone who can produce reconciled, GAAP-based monthly financials on a fixed deadline, keep pre-petition and post-petition activity cleanly separated, and support every number with documentation. That is bookkeeping work. Many debtors involve a CPA or a financial advisor anyway — particularly where the plan projections or the ASC 852 presentation are complex — but that is a judgement call made with counsel, not a filing requirement.

Your attorney does have one specific duty here: retaining the reports with original handwritten signatures for five years, unless a local rule says otherwise.

Five things that catch debtors out

1. The pre-petition and post-petition split

This is the single biggest change to your books. From the petition date forward, liabilities and retained earnings have to be tracked in two separate buckets, and the balance sheet has to show them that way. Retro-fitting that split months later is painful and expensive.

2. Every account, not just the main one

The cash receipts and disbursements statement covers all bank and investment accounts. Dormant accounts, payroll accounts and escrow accounts all count.

3. Jointly administered cases still file separately

Where several related debtors are jointly administered, each one generally files its own MOR on a non-consolidated basis, unless the U.S. Trustee directs otherwise. If your group is used to reporting on a combined basis, this reverses the habit — see our guide to consolidation schedules for how group reporting normally works and why bankruptcy deliberately unwinds it.

4. Disbursements drive your U.S. Trustee fees

Quarterly fees under 28 U.S.C. 1930(a)(6) are calculated from disbursements, and the reports feed that calculation. Misreporting disbursements does not just create a correction — it changes what you owe.

5. It is a data-embedded form

The MOR is filed through CM/ECF as a smart form with data embedded in it. It is used without alteration. You cannot substitute your own management reporting pack and call it done.

What happens if you miss one

Under 11 U.S.C. 1112(b)(4)(F), an unexcused failure to satisfy any filing or reporting requirement on time is cause for converting the case to Chapter 7 or dismissing it. Once cause is established, the court generally must convert or dismiss unless it specifically finds that doing so is not in the best interests of creditors and the estate — or decides a trustee or examiner is the better answer.

Two details are worth knowing. Courts have held that a debtor cannot shift blame to its attorney or accountant, on the reasoning that those professionals are under the debtor’s control. And filing the missing reports after a motion has been made does not necessarily cure the default. If you are going to miss a deadline, the time to ask the court or the U.S. Trustee for relief is before it passes, not after.

What this means for your bookkeeping

A Chapter 11 filing does not change what bookkeeping is. It changes the tolerance for doing it late. Monthly reconciliation of every account, a clean cut-off at month end, documentation attached to transactions, and a disciplined close are ordinary good practice in a normal year; in a Chapter 11 case they become the difference between a case that progresses and one that attracts a motion to dismiss.

Our plans start at $75 a month for 5 hours, with additional hours at $15 an hour, and that work — reconciliations, cash receipts and disbursements schedules, receivables aging, a balance sheet that separates what it needs to separate — is the same work underneath whatever form your district requires. Every plan carries a 100% money-back guarantee on your 1st retainer, refundable on the unused balance.