Procedures for Completing Uniform Periodic Reports in Non-Small Business Cases Filed Under Chapter 11 of Title 11, 82905-82915 [2020-27715]

Agencies

• Department of Justice

[Federal Register Volume 85, Number 245 (Monday, December 21, 2020)]
[Rules and Regulations]
[Pages 82905-82915]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-27715]


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DEPARTMENT OF JUSTICE

28 CFR Part 58

[Docket No: EOUST 105]
RIN 1105-AB30


Procedures for Completing Uniform Periodic Reports in Non-Small 
Business Cases Filed Under Chapter 11 of Title 11

AGENCY: Executive Office for United States Trustees (EOUST), Justice.

ACTION: Final rule.

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SUMMARY: The Department of Justice (Department), through its component, 
EOUST, issues this final rule (Rule) in accordance with Section 602 of 
the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 
(BAPCPA). The BAPCPA authorizes the Department to issue rules requiring 
uniform periodic reports (periodic reports) by debtors-in-possession or 
trustees in cases under chapter 11 of title 11. These periodic reports 
are to be used by all chapter 11 debtors who do not qualify as a 
``small business debtor'' as defined in the Bankruptcy Code. This Rule 
benefits the public by streamlining existing periodic reporting 
requirements and eliminating more than 150 existing report forms.

DATES: This Rule is effective June 21, 2021.

ADDRESSES: EOUST, 441 G Street NW, Suite 6150, Washington, DC 20530.

FOR FURTHER INFORMATION CONTACT: Ramona D. Elliott, Deputy Director/
General Counsel or Nan R. Eitel, Associate General Counsel for Chapter 
11 Practice, at (202) 307-1399 (not a toll-free number).

SUPPLEMENTARY INFORMATION: On November 10, 2014, the Department 
published a notice of proposed rulemaking (NPRM), Procedures for 
Completing Uniform Periodic Reports in Non-Small Business Cases Filed 
under Chapter 11 of Title 11. See 79 FR 66659. The comment period 
closed on January 9, 2015. In order to accommodate requests by certain 
commenters to meet with representatives of the EOUST to discuss the 
NPRM and to provide an opportunity for interested persons to express 
their views directly to EOUST officials, on February 17, 2016, the 
EOUST held a public hearing (Public Hearing) on the NPRM and reopened 
the comment period for an additional 85 days. See 80 FR 74739.
    Interested persons were afforded the opportunity to participate in 
the rulemaking process through written comments to the NPRM during the 
two comment periods and through testimony at the Public Hearing. All 
public comments and the transcript of the Public Hearing are available 
at www.regulations.gov, and are discussed below. This Rule finalizes 
the NPRM, with changes discussed below, and implements the periodic 
reports to be used by debtors-in-possession or trustees in chapter 11 
cases that do not qualify as ``small business debtors'' under the 
Bankruptcy Code.

Discussion of the Rule

    The administration of chapter 11 bankruptcy cases is entrusted to 
the debtor-in-possession under 11 U.S.C. 1107(a) or, if circumstances 
warrant, a trustee appointed under 11 U.S.C. 1104. Debtors-in-
possession and trustees must account for the receipt, administration, 
and disposition of all property; provide information concerning the 
estate and the estate's administration as parties in interest request; 
and file periodic reports and summaries of a debtor's business, 
including a statement of receipts and disbursements, and such other 
information as the United States Trustee or the United States 
Bankruptcy Court requires. 11 U.S.C. 1106(a)(1), 1107(a); Fed. R. 
Bankr. P. 2015 (a)(2), (a)(3). The monthly periodic report filed during 
the case prior to the confirmation of a plan of reorganization is 
generally known as the Monthly Operating Report (MOR). The quarterly 
periodic report filed subsequent to the confirmation of a plan of 
reorganization and before the case is closed is generally known as the 
Post-confirmation Report (PCR). There are currently more than 150 
different local MOR and PCR forms in use around the country. This Rule 
would replace those local forms with a single MOR form (UST Form 11-
MOR) and a single PCR form (UST Form 11-PCR) for use in all United 
States Trustee Program (USTP) jurisdictions. In doing so, the Rule 
strikes the best achievable practical balance between: (1) The 
reasonable needs of the public for information about the operational 
results of the Federal bankruptcy system; (2) economy, simplicity, and 
lack of undue burden on persons with a duty to file periodic reports; 
and (3) appropriate privacy concerns and safeguards.
    Though debtors-in-possession and trustees may incur modest startup 
costs when adapting to the new forms, they will nonetheless benefit 
from the simplicity that the uniform forms offer and the elimination of 
a patchwork of localized requirements. Among other benefits, the Rule 
ensures that report filers need not change accounting systems when 
entering bankruptcy. And as noted below, the USTP will release

[[Page 82906]]

the new uniform report forms in a dynamic PDF-fillable format to ease 
the completion burdens on report filers, which may be retrieved from 
the USTP's website at no cost.
    External stakeholders will likewise benefit from the consistency 
that uniform MOR and PCR forms offer. The information collected by UST 
Form 11-MOR will be used by the court, creditors, the United States 
Trustee and other parties in interest to evaluate a chapter 11 debtor's 
progress through the bankruptcy system, including the likelihood of a 
plan of reorganization being confirmed and whether the case is being 
prosecuted in good faith. See 11 U.S.C. 1129(a). Much of the 
information is already collected in the various existing local forms, 
but not in a uniform or consistent way that facilitates the national 
compilation of data essential to transparency and accountability.
    In specific cases, information collected by UST Form 11-MOR will 
assist the court and parties in interest in ascertaining the following: 
(1) Whether there is a substantial or continuing loss to or diminution 
of the bankruptcy estate; (2) whether there is a reasonable likelihood 
of rehabilitation; (3) whether there exists gross mismanagement of the 
bankruptcy estate; (4) whether the debtor may have violated a cash 
collateral order or other order of the bankruptcy court; (5) whether 
the debtor is timely paying postpetition taxes; (6) whether the debtor 
is engaging in the unauthorized disposition of assets through sales or 
otherwise; (7) whether the debtor is complying with its obligation to 
maintain appropriate insurance so as to avoid a risk to the estate or 
to the public; (8) whether the debtor is complying with its obligation 
to pay fees due under 28 U.S.C. 1930; and, (9) in the case of an 
individual debtor, if applicable, whether the debtor is complying with 
his or her obligation to pay domestic support obligations. This 
information contributes to the decision by the United States Trustee, 
or by a creditor or other party in interest, to file a motion to 
dismiss the bankruptcy case, to seek conversion of the case to a case 
under chapter 7, or to seek an order directing the appointment of a 
chapter 11 trustee. The information in the periodic reports is also 
relevant evidence that the court may consider in determining whether to 
grant such relief. See, e.g., 11 U.S.C. 1112(b)(4)(A), (B), (C), (D), 
(E), (I), (J), (K), and (P); and 1104(a). The court may also use this 
information when considering sua sponte action.
    The information collected by UST Form 11-PCR will be used to 
evaluate whether a chapter 11 debtor is performing as anticipated under 
a confirmed plan. Specifically, information collected by UST Form 11-
PCR will assist the court and parties in interest in ascertaining the 
following: (1) Whether a debtor is able to substantially consummate a 
confirmed plan; (2) whether the debtor is in material default under a 
confirmed plan; and (3) whether the debtor is paying fees required 
under 28 U.S.C. 1930. If the debtor fails to perform under the 
confirmed plan, the United States Trustee, creditors, or other parties 
in interest may bring an appropriate motion to dismiss the case, revoke 
a confirmed plan, or convert the case to a case under chapter 7. See 11 
U.S.C. 1112(b)(4)(K), (M), and (N); 11 U.S.C. 1144.
    The periodic reports include sufficient information to inform 
creditors and other interested parties of the debtor's financial 
affairs, but are simple enough to provide ready, meaningful access to 
the information. Moreover, the periodic reports accomplish the goals of 
uniformity and transparency regarding a debtor's financial condition 
and business activities.
    The periodic reports are uniform and will be filed as ``smart 
forms'' with the United States Bankruptcy Court in which the chapter 11 
case is pending via the court's Case Management/Electronic Case Filing 
System (CM/ECF). A ``smart form'' is a document that is data-embedded. 
When the document is saved into the industry standard Portable Document 
Format (PDF), stored data tags are then available for extraction and 
searching. In contrast, when a form is not data-embedded, the PDF is 
simply an image of the form, and the data is not uniformly available 
for searching or extraction. The data-embedded form builds upon the 
existing Adobe PDF/A standards (Versions 1.4-1.7). Once the periodic 
reports are finalized, the current data schema (DTD) will be found on 
www.justice.gov/ust. Once the periodic reports are finalized, debtors-
in-possession, chapter 11 trustees, and members of the public may 
obtain blank ``smart form'' periodic reports from the USTP website at 
www.justice.gov/ust or from their respective vendors of case management 
software.
    Once filed with a bankruptcy court, the periodic reports will be 
available to the general public at the office of the clerk of the 
United States Bankruptcy Court where the case is pending during the 
hours established by the bankruptcy clerk of court. Members of the 
public should contact the clerk's office of individual bankruptcy 
courts to obtain information about the policies and procedures for 
inspection of periodic reports filed in any particular case. Periodic 
reports filed in cases are also available through the internet by 
accessing the website for the Administrative Office of the United 
States Courts known as Public Access to Court Electronic Records 
(PACER) at www.pacer.psc.uscourts.gov. In order to access court records 
through PACER, users must register and obtain a user name and password. 
In addition, users must pay a fee for obtaining records through PACER.
    Finally, the promulgation of the periodic reports accomplishes 
Congress's directive that the Department issue uniform forms for 
periodic reports for debtors-in-possession and chapter 11 trustees. The 
forms will also assist policy-makers, scholars, and the public in 
better understanding the bankruptcy system. Instead of many different 
versions of the periodic reports, debtors-in-possession and chapter 11 
trustees will use the same two forms. The consistency and uniformity of 
the periodic report forms will also assist the public, creditors and 
other parties-in-interest in understanding the administration of 
chapter 11 bankruptcy cases, especially when such parties are located 
in a different region or jurisdiction from where the bankruptcy case is 
located. Scholars and members of the public may also be able to obtain 
aggregate data with the necessary software. Uniformity and consistency 
in the information collected may also facilitate national aggregation, 
which will assist Congress in its efforts to analyze bankruptcy trends 
and make policy decisions, without imposing significant additional 
burdens upon trustees and debtors-in-possession.

Discussion of Public Comments

    The EOUST received nine public submissions in response to the first 
public comment period on the NPRM and three public comments in response 
to the second public comment period on the NPRM. The EOUST heard 
testimony of five witnesses at the Public Hearing. The EOUST considered 
all of the comments and the testimony of the witnesses, and in 
response, the EOUST has modified the Rule. These modifications include 
clarifying, revising, or expanding various provisions, requiring the 
submission of three standard financial statements (non-individual 
debtors only), and making technical edits. In addition, the EOUST has 
modified the periodic reports and instructions. Some changes were made 
to conform the forms and instructions to the Rule modifications

[[Page 82907]]

and other changes were made to clarify the forms and instructions. 
Summaries of the comments and the EOUST's responses are discussed 
below.

A. General Comments

1. Mandatory Information v. Supporting Documentation
    Comment: The commenters expressed divergent views regarding whether 
the Rule requires report filers to provide too little or too much 
information on UST Form 11-MOR. The tension, in this regard, was 
between collecting the minimum information required by the statute and 
collecting more comprehensive business information than the NPRM 
proposed.
    For example, one commenter stated that the MOR should contain 
information similar to that required by the Securities and Exchange 
Commission (SEC) for publicly traded companies. The commenter further 
advocated that the supporting documentation listed in section 
58.8(d)(1) through (10) of the NPRM should be mandatory in any case 
with assets exceeding $100 million. The NPRM identified:
    (1) A statement of cash receipts and disbursements;
    (2) A balance sheet;
    (3) A profit and loss statement;
    (4) An aged summary of accounts receivable;
    (5) An aged summary schedule of postpetition liabilities;
    (6) A statement of capital assets;
    (7) A schedule of payments to professionals;
    (8) A schedule of insider payments;
    (9) Bank statements and reconciliations; and
    (10) Descriptions of asset sale transactions.
    The commenter further suggested that parties in interest should 
have the right to seek supplemental documentation from debtors with 
assets less than $100 million by petitioning the United States Trustee 
or the court. The EOUST also received a comment that debtors should be 
required to include projections, risk factors, potential conflicts of 
interest, and other material financial information, including 
management discussions and analysis, insider transactions, and material 
company events. Another commenter asserted that requiring very detailed 
financial reports would be less burdensome on the USTP, creditors, and 
governmental authorities than requiring more extensive supporting 
documents on an ad hoc basis, and that smaller business and individual 
debtors may seek to be excused from preparing certain supplemental 
documents.
    By contrast, one commenter stated that the Rule asks too much and 
would be unduly burdensome, particularly on individual debtors. Another 
commenter noted that providing detailed supplemental documentation to 
any party in interest may be problematic if there are no 
confidentiality or non-disclosure agreements in place. The EOUST also 
received a comment asserting that the debtor should be required to meet 
with the United States Trustee at the start of the case to discuss the 
debtor's reporting requirements and capabilities, and agree on the 
supplemental documentation that may be required.
    Response: The Rule strikes a reasonable balance between ensuring 
that the debtor provides sufficient information to enable the court, 
creditors, and other parties in interest to ascertain the debtor's 
financial condition and not overburdening the report filer. In 
addition, the use of a uniform form ensures that certain statistical 
information is accessible as required by the statute. The Rule and the 
periodic report forms achieve this balance, while remaining adaptable 
to the circumstances of both individual debtors and large corporate 
enterprises. The more extensive reporting requirements suggested by two 
of the commenters shift that balance by proposing to make far more 
information mandatory for a significant segment of chapter 11 debtors. 
Most debtors hold less than $100 million in assets and are not publicly 
traded companies subject to ongoing SEC reporting. And, as a witness 
noted at the Public Hearing, entities subject to SEC reporting only 
submit that detailed information on a quarterly and annual basis, 
rather than monthly. Requiring information akin to the public 
disclosures mandated by the SEC is impractical, expensive, and 
burdensome. The periodic reports are not a substitute for SEC filings, 
nor are SEC filings a substitute for periodic reports. If parties in 
interest seek this information, it is available from all publicly 
traded debtors in their SEC filings. Finally, the Rule does not abridge 
parties' rights to seek additional information through informal inquiry 
or in accordance with the Bankruptcy Code and the Federal Rules of 
Bankruptcy Procedure.
    The EOUST agrees, however, that certain financial statements should 
be mandatory for every non-individual debtor. Accordingly, the EOUST 
has modified the NPRM to require non-individual debtors to file:
    (1) A Statement of Cash Receipts and Disbursements;
    (2) A Balance Sheet; and
    (3) A Statement of Operations (Profit or Loss Statement) with each 
Monthly Operating Report.
    Virtually every debtor has or should maintain these three common 
financial statements. Under current USTP practice, various field 
offices often require these three financial statements as attachments 
to their local periodic report forms. The EOUST has created a new 
section 58.8(d)(3) providing for the submission of additional 
supporting documentation at the discretion of the United States 
Trustee, which supporting documentation was previously provided for in 
former section 58.8(d)(4)-(11). In cases requiring formal enforcement, 
the USTP must seek relief from the bankruptcy court. See 11 U.S.C. 
1112(b)(4).
    The EOUST also agrees with the commenters who suggested that the 
debtor and the United States Trustee should confer early in the case, 
whether at the Initial Debtor Interview (``IDI'') or some other initial 
meeting, to discuss the debtor's reporting capabilities and the 
supplemental documentation that the debtor will be required to file. 
Field offices typically schedule IDIs within the first few weeks after 
the petition date and before the first scheduled meeting of creditors 
under 11 U.S.C. 341 (the ``Section 341 Meeting''). The EOUST modified 
the instructions for UST Form 11-MOR to clarify that this initial 
meeting should occur before both the first MOR due date and the Section 
341 Meeting.
2. Publicly Available Data
    Comment: The EOUST received a comment asserting that data collected 
in the MORs and PCRs should be publicly available in a national 
searchable database. The commenter suggested that the phrase ``may be 
data enabled to facilitate the national compilation of data'' in the 
preamble to the Rule should be changed to ``shall be data enabled to 
facilitate the national compilation of data.''
    Response: The EOUST accepts the recommendation by clarifying how 
the periodic report forms will function as electronic documents. 
Section 58.8(j)(2) of the Rule clearly provides that the ``Periodic 
Reports shall be filed via the United States Bankruptcy Courts' Case 
Management/Electronic Case Filing System (CM/ECF) as a `smart form,' 
meaning the reports are data-embedded.''
    The EOUST has replaced the term ``data-enabled'' in the NPRM with 
``data-embedded.'' The periodic report forms will be read only data-
embedded forms, which are the type of forms used by the U.S. Courts.

[[Page 82908]]

    The EOUST rejects the suggestion that the EOUST should create a 
publicly searchable database of information collected from the periodic 
reports. The statute does not require the creation of a publicly 
searchable database. Instead, the statute requires that the periodic 
reports ``facilitate compilation of data and maximum possible access of 
the public, both by physical inspection at one or more central filing 
locations, and by electronic access through the internet or appropriate 
media.'' 28 U.S.C. 589b(b). Accordingly, the public can obtain the 
filed periodic reports from any bankruptcy clerk's office and can also 
extract the embedded data through PACER with appropriate software.
3. Certification, Service, Filing Deadlines
a. Certification of Periodic Reports (Sec.  58.8(i))
    Comment: One commenter asserted that retaining the periodic reports 
with original ``wet'' signatures for five years is burdensome and 
contrary to the Paperwork Reduction Act (PRA). Another commenter 
suggested that retaining periodic reports with either original 
signatures or an electronic copy of the signed periodic report should 
be sufficient.
    Response: The EOUST concludes that retaining the periodic reports 
with original holographic signatures is not burdensome. The requirement 
does not create additional, duplicative, or unnecessary paperwork; it 
merely ensures that the original document is preserved for a period of 
time. The retention of original holographic signatures is important to 
the efforts of the EOUST, as well as the Department of Justice, to 
combat abusive bankruptcy practices through criminal prosecution and 
civil enforcement. Although defendants repudiate signatures in a small 
minority of cases, the availability of the original signature is key to 
overcoming such a defense, and, also, in the view of prosecutors, 
deters defendants from contesting the authenticity of signatures in the 
first instance. In addition to the authenticity of the signature 
itself, electronic signatures are more easily manipulated and appended 
to documents without the authorization or knowledge of the signatory. 
See also Letter from James M. Cole, Deputy Att'y Gen., U.S. Dep't of 
Justice, to the Hon. Jeffrey S. Sutton, Chair, Comm. on Rules of 
Practice and Procedure, Admin. Office of the U.S. Courts (Feb. 13, 
2014) (on file with author), available at https://www.regulations.gov/document?D=USC-RULES-BK-2013-0001-0128.
    In addition, preservation of the periodic reports with original 
signatures is not a collection of information from the public under the 
PRA. See 44 U.S.C. 3506(c)(1). Even if the PRA were implicated, the 
EOUST provided the requisite notice under the PRA that retention of 
documents with original signatures will be required. See 44 U.S.C. 
3506(c)(2).
b. Declaration Upon Knowledge and Belief
    Comment: One commenter suggested that the periodic reports should 
be signed under penalty of perjury with the qualification that the 
report and any attachments thereto are true and correct to the best of 
the signer's ``knowledge and belief.''
    Response: The EOUST declines to add the qualification. The EOUST 
concluded that the ``knowledge and belief'' language may contradict or 
undermine the purpose of signing the periodic reports under the penalty 
of perjury, which is a stricter standard, to ensure that the 
information provided in the periodic reports is reliable and accurate. 
Moreover, the ``knowledge and belief'' language is not consistent with 
the official bankruptcy forms promulgated by the Judicial Conference of 
the United States. For example, Official Form 101 requires debtors to 
certify that they ``have examined this petition, and [they] declare 
under penalty of perjury that the information provided is true and 
correct.'' Thus, adding ``knowledge and belief'' language to the 
periodic reports would inappropriately create inconsistent standards 
for truthfulness.
c. Signature on the UST Form 11-PCR
    Comment: The EOUST received a comment that the signature line of 
the UST Form 11-PCR should be changed to add the designation ``Plan 
Trustee'' or ``Plan Administrator.''
    Response: The EOUST agrees with this recommendation, in part. 
Rather than identify an exhaustive number of report filer titles, the 
EOUST modified the signature line to provide for any authorized 
signatory.
d. Service of the Periodic Reports
    Comment: The EOUST received several comments regarding service of 
the periodic reports. Two commenters stated that the debtor should not 
be required to serve UST Form 11-MOR on each member of any Official 
Committee of Unsecured Creditors or on any governmental taxing 
authority because doing so would be unduly burdensome. One of these 
commenters also stated that confidentiality issues may arise if the 
Rule requires the debtor to serve supplemental documentation to ``any 
party in interest'' that has not agreed to confidentiality or non-
disclosures. The same commenter also stated that UST Form 11-PCR should 
be served on any post-confirmation committee.
    Response: The EOUST agrees that service upon individual members of 
the committee is unnecessary when the committee has engaged counsel and 
has modified the Rule accordingly. The EOUST disagrees with the 
suggestion that the MOR should not be served upon taxing authorities. 
Periodic reports must specify whether tax returns have been timely 
filed and whether tax payments have been timely made since the date of 
the order for relief. 28 U.S.C. 589b(e)(5). Service of the periodic 
reports on taxing authorities provides the relevant taxing authorities 
with a meaningful opportunity to review the representations made. The 
EOUST also modified section 58.8(b) of the Rule to permit taxing 
authorities to opt out of being served with the periodic reports. 
Finally, concerns about confidentiality as to supplemental information 
may be addressed on a case by case basis at the initial meeting between 
the United States Trustee and the debtor.
e. Filing Deadlines (Sec. Sec.  58.8(e), (g))
    Comment: One commenter stated that the Rule should establish a 
uniform national due date for all periodic reports of the 25th of each 
month. Two commenters focused on the initial due date for the UST Form 
11-MOR. One stated that the first report should be due in the second 
full month of the case and should cover the period from the filing date 
to the end of the first full month. A second commenter stated that the 
initial report should be filed by the earlier of (1) the 60th day after 
the order for relief or (2) the 30th day after the end of the first 
full calendar month after the order for relief. With respect to the UST 
Form 11-PCR, the EOUST received one comment that the Rule should 
clearly state that the Post Confirmation Report is filed quarterly only 
after the plan is confirmed. Another commenter noted that the phrase 
``confirmation of the plan'' is unclear as to whether it is the date of 
entry of the confirmation order or the effective date of the plan. 
Finally, one commenter advocated that the Rule should permit the 
flexibility to make the filing deadline coincide with SEC reporting 
deadlines for those debtors that are public registrants.
    Response: The EOUST agrees that a uniform due date for periodic 
reports should be established, where

[[Page 82909]]

practicable, but declines to adopt any other due date suggestions. The 
EOUST modified the Rule to provide that both periodic reports are due 
on the 21st day of the month immediately following the reporting 
period, subject to any local bankruptcy rule that requires a different 
due date. The Rule balances the practical concerns of a report filer, 
other parties' need for information early in a case, and any local 
bankruptcy rules. A 60-day delay in filing the initial MOR would permit 
a debtor to operate with less transparency for the critical first two 
months of the case.
    Additionally, the EOUST has maintained the same important balance 
in setting the initial MOR due date. The 20th of the month cut off 
addresses the concern regarding the burden of filing a partial month 
report by not requiring the filing of a MOR for a period that is fewer 
than ten days. The EOUST also declines to adjust the filing deadline 
for debtors who are public registrants so that it coincides with SEC 
reporting deadlines. The uniform deadline provides necessary 
predictability, while maintaining the flexibility to permit consistency 
with local bankruptcy rules. Because they require different reported 
information, quarterly SEC filing deadlines are not relevant to the 
monthly periodic reports. Finally, the EOUST has modified the Rule and 
instructions to clarify that Form 11-PCR is required to be filed 
following the effective date of a confirmed plan.
4. Accounting Methods (Sec.  58.8(h))
a. Generally Accepted Accounting Principles
    Comment: Two commenters stated that Generally Accepted Accounting 
Principles (GAAP) may not be the appropriate accounting method and will 
be unduly burdensome for those debtors who do not regularly use it. One 
of these commenters added that GAAP accounting would be particularly 
difficult for individual debtors because most individuals do not use 
this accounting method, nor do they keep books in the same manner 
businesses do. The other commenter added that reference in the Rule to 
``Statement of Position 90-7'' should be changed to Financial 
Accounting Standards Board Accounting Standards Codification (FASB ASC) 
852, Reorganizations.
    Response: The EOUST concludes that debtors who do not already 
follow GAAP will not be required to adopt GAAP to prepare the periodic 
reports. Accordingly, the EOUST has modified the Rule to permit debtors 
to complete the periodic reports using the accounting method the debtor 
used prepetition. The EOUST has also removed references to Statement of 
Position 90-7 and has replaced it with a reference to Financial 
Accounting Standards Board Accounting Standards Codification (FASB ASC) 
852, Reorganizations.
b. Inventory Costing Methodology
    Comment: One commenter asserted that the debtor should be required 
to disclose its inventory costing method as well as any change to such 
method.
    Response: The EOUST agrees that this information is beneficial. 
While the Rule required no modifications, the EOUST has modified the 
UST Form 11-MOR and the instructions to include costing methodology 
disclosure.

B. Comments on Specific Provisions of the Rule

1. Professional Fees
a. Reporting Professional Fees on an as Incurred or as Approved Basis 
(Sec. Sec.  58.8(b)(8), 58.8(f)(3))
    Comment: Five commenters stated that the debtor should be required 
to report fees as incurred rather than, or in addition to, those 
approved by the bankruptcy court. The commenters assert that reporting 
fees as incurred would allow for earlier monitoring of fees generally, 
would provide a more timely picture of the debtor's cash flow, and 
would provide notice of fees that are incurred but do not necessarily 
require court approval, such as fees paid to a secured creditor under 
loan agreements or financing orders or fees paid to ordinary course 
professionals.
    Response: The statute specifically provides that the periodic 
reports ``shall'' include ``all professional fees approved by the court 
in the case for the most recent period and cumulatively since the date 
of the order for relief . . .,'' and the language in the Rule at 
section 58.8(b)(8) mirrors this provision. See 28 U.S.C. 589b(e)(6). 
The EOUST concludes that debtors should provide the information 
required by the statute, and if necessary, on a case by case basis and 
as requested by the United States Trustee, provide cash disbursement 
registers or ledgers as permitted by section 58.8(d)(3)(H) of the Rule. 
In addition, when interim fee procedures exist, the amount of fees ``as 
incurred'' is available from other sources such as periodic fee 
applications and monthly fee statements of estate professionals. The 
additional supporting documentation pertaining to cash disbursements 
and these other sources present a meaningful picture of the financial 
operations of the debtor's business.
b. Itemization of Specific Professional Fees (Sec.  58.8(b)(8))
    Comment: Seven commenters stated that the MOR should provide 
separate line items for each professional with a more detailed 
description of the professional's role in the case to better understand 
case staffing and costs. One commenter advocated that the breakdown of 
professional fees should be by type (bankruptcy professional; 
nonbankruptcy professional; ordinary course professionals; secured 
lender; committee or other professionals). Others suggested that 
itemization by firm and type of service (e.g., legal or accounting) 
would be sufficient, and one commenter suggested that the EOUST should 
provide a better definition of the term ``nonbankruptcy matters'' in 
order to avoid inconsistent application of that term. One commenter 
stated that requiring individual debtors to separate bankruptcy from 
non-bankruptcy fees would be burdensome. Two commenters added that 
there should be a specific line item for efficiency counsel because 
separate disclosure of efficiency counsel fees would allow a more 
thorough review of how each firm is used and would encourage the 
appropriate assignment of tasks. A third commenter, while not 
specifically referring to efficiency counsel, agreed with this 
rationale.
    Response: The EOUST agrees that professional fees should be 
reported in more detail for the reasons given by the commenters. Three 
kinds of professional fees are paid in a bankruptcy case:
    (1) Those allowed and approved by the court after a fee application 
(traditional bankruptcy fees);
    (2) Those approved to be paid under an ``ordinary course 
professional'' order, and generally capped by a certain amount each 
month and in the aggregate, and requiring a fee application if the 
amount billed exceeds the cap (OCP fees); and
    (3) Those paid to professionals based upon contractual rights, such 
as fees for secured creditors' counsel that are authorized to be paid 
under a financing, adequate protection, or cash collateral order 
(contractual fees).
    The statute requires that fees incurred on behalf of the debtor be 
reported separately from ``those that would have been incurred absent a 
bankruptcy case.'' 28 U.S.C. 589b(e)(6). OCP fees will often be for 
non-bankruptcy work, such as fees incurred in a state court tort 
action, and are required to be reflected on the periodic reports. 
However, unlike traditional bankruptcy fees and OCP

[[Page 82910]]

fees, contractual fees are not limited or reviewed by the court. It may 
also be difficult to breakout which contractual fees were incurred in 
connection with the bankruptcy case and which contractual fees would 
have been incurred regardless of whether a bankruptcy case was filed. 
Requiring a debtor to report a secured lender's fees on its periodic 
reports in similar detail to estate professionals' fees would impose 
undue burdens on the report filer, because it would require the report 
filer to find out this information from third parties who may not be 
forthcoming. Finally, the EOUST must also reject the suggestion not to 
require individual debtors to segregate bankruptcy from nonbankruptcy 
fees because the statute requires this segregation. See 28 U.S.C. 
589b(e)(6).
    The EOUST has modified the form and the instructions for both the 
MOR and PCR to add line items for lead counsel, efficiency counsel, co-
counsel, local counsel, financial professionals, and other 
professionals. If warranted by the facts of the case, the United States 
Trustee may request that the debtor attach a supplemental schedule that 
identifies all fees and expenses for professionals employed in the 
bankruptcy case per renumbered section 58.8(d)(3)(D) of the Rule.
    The EOUST also agrees that the definition of ``nonbankruptcy 
matters'' should be clarified. Accordingly, the EOUST has added a 
definition of ``nonbankruptcy matters'' in the periodic report 
instructions.
2. Individual Chapter 11 Debtors (Sec.  58.8(c))
a. Separate UST Form MOR-11 and PCR-11 for Individual Debtors
    Comment: One commenter advocated that a separate form should be 
created for individual debtors because the commenter believed that the 
proposed forms were too complicated. Another commenter suggested that 
high wealth individual debtors with complex financial structures should 
use a more detailed MOR form than that proposed.
    Response: The statute prescribes ``uniform forms for--periodic 
reports by debtors in possession or trustees.'' 28 U.S.C. 589b(a)(2). 
It does not specify separate forms for individual debtors, high wealth 
or otherwise. The EOUST has revised the forms and instructions, 
however, to clarify which sections apply to individual debtors. The 
EOUST has modified Part 8 of UST Form 11-MOR to better reflect the 
types of disbursements typically made by individual debtors. If further 
information is needed from high wealth individual debtors, the United 
States Trustee may exercise discretion and request it. And finally, 
parties seeking more detailed information from debtors may seek that 
information through informal inquiry or in accordance with the 
Bankruptcy Code and the Federal Rules of Bankruptcy Procedure.
b. Requirements To Report Certain Business Activity Is Burdensome and 
Confusing to Individual Debtors
    Comment: Two commenters focused on the burden that would be placed 
on individual chapter 11 debtors if they were required to provide 
income statements, statements of operations, or other supporting 
documents identified in section 58.8(d) of the NPRM because most 
individual debtors do not keep these kinds of records. Another 
commenter suggested that individual debtors should be required to 
provide this information unless they obtain a waiver from the United 
States Trustee.
    Response: The NPRM imposed identical document production 
requirements on individual and non-individual debtors. The EOUST 
considered the competing comments regarding the scope of the 
supplemental documentation requirements placed on individual debtors 
and has modified section 58.8(d) and has added new section 58.8(d)(2) 
to provide that individuals need not provide supplemental documentation 
unless the United States Trustee requests it in the United States 
Trustee's discretion.
3. Jointly Administered Cases
    Comment: One commenter stated that the Rule should clarify whether 
reporting in jointly administered cases should be on a per entity, 
nonconsolidated basis or whether jointly administered debtors may be 
permitted to submit one single consolidating form.
    Response: The EOUST agrees and has modified the Rule to clarify 
that periodic reports in jointly administered cases shall be filed on a 
per entity, nonconsolidated basis. Use of a single consolidating form 
in jointly administered cases would make data extraction difficult and 
would require the creation of a separate form and a separate data-
extraction process for jointly administered cases, which would impose 
undue costs and burdens. Moreover, the EOUST has observed that some 
debtors that presently file consolidating forms in certain districts 
are not providing sufficient information on a per-debtor basis. 
Requiring each debtor in a jointly administered case to file a separate 
MOR addresses this problem. Accordingly, the EOUST has modified 
sections 58.8(b) and 58.8(f) to clarify that, in jointly administered 
cases, unless otherwise required by the United States Trustee in the 
United States Trustee's discretion, each jointly administered debtor is 
required to file a separate periodic report on a nonconsolidated basis. 
The EOUST also made conforming changes to the instructions for each 
form.
4. Full-Time Employees (Sec.  58.8(b)(3))
    Comment: One commenter suggested that the Rule should require the 
debtor to report both full-time (or full-time equivalent) and part-time 
employees in order to reflect a fuller picture of whether jobs were 
saved or created during the bankruptcy case.
    Response: The statute requires that the periodic reports include 
the ``number of full-time employees as of the date of the order for 
relief and at the end of each reporting period since the case was 
filed.'' 28 U.S.C. 589b(e)(6). The Rule conforms to the statute.
    The EOUST considered the potential benefits offered by the 
additional categories of full-time equivalent and part-time employees. 
Though reporting the additional employee categories might provide a 
broader picture of the debtor's workforce, the EOUST concludes that the 
additional categories would be too subjective and variable, and 
therefore, would be unlikely to provide meaningful information 
regarding whether jobs were saved or created.
5. Taxes and Insurance (Sec. Sec.  58.8(b)(9), (b)(14))
    Comment: Two commenters suggested that the debtor should be 
required to itemize what tax and insurance payments have been made. One 
of those commenters further inquired whether risk management products 
(such as swaps or other derivatives) are considered ``insurance'' for 
the purposes of the MOR.
    Response: The EOUST agrees that itemization of tax and insurance 
payments would be beneficial and has modified UST Form 11-MOR to 
include additional lines for reporting the different types of tax and 
insurance payments. The Rule does not require amendment because it very 
broadly requires the reporting of tax and insurance payments. Section 
58.8(d)(3) further permits the United States Trustee to request 
additional documentation on a case by case basis, if necessary, to 
present a complete picture of the financial operations of the debtor. 
Finally, the EOUST has modified the form instructions to clarify that 
risk management products such as

[[Page 82911]]

swaps and other derivatives are not considered insurance for the 
purposes of the MORs.
6. Payments Made on Prepetition Debt (Sec.  58.8(b)(10))
    Comment: One commenter stated that the Rule should not limit 
disclosure of payments toward prepetition debt to those solely to 
secured lenders or lessors, but should include payments on unsecured 
debt as well. Another commenter noted that the Rule should include 
undersecured debt and debts in which the security interest is in 
dispute.
    Response: The EOUST concludes that the wording in draft section 
58.8(b)(10) could give rise to different and contradictory 
interpretations. Therefore, the EOUST has modified section 58.8(b)(10) 
to clarify that report filers should include all payments of 
prepetition debt (including unsecured debt).
7. Payments to or on Behalf of Insiders (Sec.  58.8(b)(12))
    Comment: Two commenters stated that the report filer should be 
required to explain the nature and type of insider transactions, rather 
than simply list the payments made.
    Response: The EOUST agrees that additional information regarding 
unusual transactions, such as insider transactions, is often 
beneficial. The Rule does not require amendment because the United 
States Trustee has the discretion to request this documentation under 
former section 58.8(d)(11) (renumbered as section 58.8(d)(3)(E)). UST 
Form 11-MOR has been modified to add space for additional information 
concerning insider transactions.
8. Cash Flow and Other Statements (Sec.  58.8(d))
    Comment: One commenter stated that the Rule should require report 
filers to submit the following statements:
    (1) Statement of changes in cash flow;
    (2) Statement of changes in equity (deficit); and
    (3) Intercompany account balances.
    Response: While the EOUST agrees that these documents may be 
valuable on a case by case basis, the Rule does not require amendment 
because these items are already included in former section 58.8(d)(11) 
(renumbered as section 58.8(d)(3)(I)). The EOUST has modified the 
instructions for UST Form 11-MOR to include these items in the list of 
supplemental documentation the United States Trustee may request.
9. Balance Sheets, Statement of Capital Assets (Sec.  58.8(d))
    Comment: One commenter stated that the debtor's balance sheet 
should mirror the disclosures required by the SEC's Regulation S-X and 
that the Statement of Capital Assets should include the original cost, 
amortization to date, amortization method and life for each major 
component of capital assets.
    Response: The EOUST disagrees. The MOR does not supplant required 
SEC filings. Parties in interest can obtain this information from 
public companies' securities filings. Moreover, requiring these 
disclosures from non-publicly traded companies and individuals may 
impose undue burdens.
10. Accounts Receivable (Sec.  58.8(d))
    Comment: One commenter stated that the report filer should be 
required to report accounts receivable both gross and net of any 
reserves. The commenter also stated that the debtor should be required 
to report the total of accounts receivable both prepetition and 
postpetition because prepetition accounts receivable may not be 
available.
    Response: The EOUST recognizes that additional information 
concerning accounts receivable may be beneficial, but disagrees with 
the comment and concludes that accounts receivable should be reported 
consistent with the debtor's prepetition accounting practices. Though 
the Rule does not require amendment, the EOUST has modified the 
instructions to UST Form 11-MOR to permit the reporting of additional 
detail regarding accounts receivable.
11. Post-Confirmation Reports: Disbursements and Transfers (Sec.  
58.8(f))
    Comment: One commenter asserted that the report filer should be 
required to report cash and property transfers separately. Another 
commenter stated that the report filer should be required to report 
noncash distributions of securities in the reorganized debtor and the 
value of noncash distributions.
    Response: The EOUST agrees that separate reporting of the 
information requested by both commenters would be beneficial. The EOUST 
has modified the UST Form 11-PCR to include line items for transfers of 
securities and other noncash property, though the Rule does not require 
amendment. The statute also requires the debtor to report, ``by class, 
the recoveries, expressed in aggregate dollar values.'' 28 U.S.C. 
589b(e)(7). Thus, the EOUST has added a line to the PCR instructions 
requiring those debtors making distributions of securities or other 
property to use the valuation method described in the disclosure 
statement, regardless of the value of the securities or other property 
on the distribution date. If the disclosure statement does not give a 
value for the securities or other property or does not describe the 
valuation method, the report filer should provide an explanation of how 
the securities or other property have been valued for the purposes of 
the PCR.

Summary of Changes in Final Rule

    The final Rule differs from the NPRM in the following ways:
    1. Section 58.8(a) has been modified to include an additional 
clarifying sentence providing that the Rule does not excuse, supersede, 
or otherwise modify any applicable nonbankruptcy reporting obligations.
    2. Section 58.8(b) has been modified to permit taxing authorities 
to opt out of being served with periodic reports.
    3. Section 58.8(b) and section 58.8(f) now provide that in jointly 
administered cases each debtor, trustee, reorganized debtor, or other 
authorized party charged with administering a confirmed plan is 
required to file a separate periodic report on a nonconsolidated basis, 
unless otherwise required by the United States Trustee in the United 
States Trustee's discretion.
    4. Section 58.8(b)(10) has been modified to require the reporting 
of all payments of unsecured debt.
    5. Section 58.8(d)(1) now requires non-individual debtors to file:
    (a) A statement of cash receipts and disbursements;
    (b) A balance sheet; and
    (c) A statement of operations (profit and loss statement) with each 
MOR.
    6. Section 58.8(d)(2) has been added to provide the United States 
Trustee with the discretion to require individual debtors to file the 
documentation identified in Sec.  58.8(d)(1). Section 58.8(d)(3) 
provides the United States Trustee with the discretion to require any 
debtor or trustee to provide any other supporting documentation 
necessary to present a complete picture of the financial operations of 
the estate.
    7. Former Sec. Sec.  58.8(d)(4) through (11), that provide for the 
submission of additional supporting documentation at the discretion of 
the United States Trustee, have been moved into new section 58.8(d)(3).
    8. Sections 58.8(e) and (g) now provide that MORs and PCRs are due 
by the 21st day of the relevant month, subject to any local bankruptcy 
rule that requires a different due date. Section 58.8(g) also clarifies 
that PCR forms are

[[Page 82912]]

required to be filed following the effective date of a confirmed plan.
    9. Section 58.8(h) clarifies that a debtor may use whatever 
accounting method the debtor used prepetition and does not require GAAP 
of all debtors. Section 58.8(h) also deletes the reference to 
``Statement of Position 90-7'' and replaces it with ``Accounting 
Standards Codification 852, Reorganizations, Financial Accounting 
Standards Board.''
    10. The term ``data-enabled'' in Sec.  58.8(j)(2) has been replaced 
with the term ``data-embedded.''

Executive Orders 12866, 13563, and 13771--Regulatory Review

    This Rule has been drafted and reviewed in accordance with
    (1) Executive Order 12866, ``Regulatory Planning and Review'' 
section 1(b), Principles of Regulation;
    (2) Executive Order 13563 ``Improving Regulation and Regulatory 
Review'' section 1(b) General Principles of Regulation; and
    (3) Executive Order 13771, ``Reducing Regulation and Controlling 
Regulatory Costs'' section 3(a), Annual Regulatory Cost Submissions to 
the Office of Management and Budget (OMB).
    This Rule is not a ``significant regulatory action'' under 
Executive Order 12866, and, accordingly, this Rule has not been 
reviewed by OMB.
    Executive Orders 12866 and 13563 direct all agencies to assess all 
costs and benefits of available regulatory alternatives and, if 
regulation is necessary, to select regulatory approaches that maximize 
net benefits (including potential economic, environmental, public 
health and safety effects, distributive impacts, and equity). Executive 
Order 13563 emphasizes the importance of quantifying both costs and 
benefits, of reducing costs, of harmonizing rules, and of promoting 
flexibility. Executive Order 13771 emphasizes the need to identify 
incremental costs and requires approximation of the total costs or 
savings associated with the regulation over future fiscal years. The 
Department has assessed the costs and benefits and costs savings of 
this regulation and believes that the regulatory approach selected 
maximizes net benefits and, after minimal initial costs, will yield 
costs savings.
    It is estimated that the cost to the government for developing 
these periodic reports is approximately $67,000. The estimated cost to 
develop a system to store information extracted from these reports and 
to analyze the data is approximately $144,000. The USTP anticipates 
using existing information technology resources to meet the costs 
associated with developing the periodic reports and a system to store 
the information extracted from the reports. The USTP expects the 
initial investment to be offset within the first four years of 
implementation. Beyond these amounts, there will be no additional cost 
to the government or to the public, and costs savings to the government 
are expected from updating these reports to an electronic format.
    Because debtors-in-possession and trustees are already required to 
complete periodic reports, the Rule is not a new layer of regulation. 
See 11 U.S.C. 704, 1106, and 1107. Moreover, the Rule imposes no 
obligations on the general public because only debtors-in-possession 
and trustees for chapter 11 bankruptcy cases are responsible for filing 
periodic reports. By contrast, the information disclosed in the 
periodic reports is of vital importance to the bankruptcy process. The 
reported information assists the courts, creditors, and other 
stakeholders in assessing, among other things, the likelihood of 
rehabilitation, whether the bankruptcy estate has been mismanaged, and 
whether the estate maintains adequate insurance coverage to protect 
both creditors and the general public from harm.
    Periodic report forms are currently used across the country, but 
the format and content of the forms vary by region, office, and 
district. The use of congressionally required uniform forms for 
periodic reports will assist policy-makers, scholars, and the public in 
better understanding the bankruptcy system. Instead of many different 
versions of periodic report forms, currently numbering over a hundred, 
debtors-in-possession and trustees will use the same data-embedded 
forms.
    Requiring a uniform periodic report will aid external stakeholders 
by providing consistency across different jurisdictions and also 
helping to streamline the processing of reports by the USTP. Uniformity 
and consistency will also assist counsel, creditors, and other 
stakeholders with a national presence in their analysis of the 
disclosed information. Additional administrative requirements for 
external parties are expected to be minimal. On the basis of these 
considerations, the Rule for uniform periodic reports would provide net 
benefits to the USTP and the general public.
    The total estimated cost to implement and maintain the proposed 
system is $211,000. This cost is expected to be offset over time by 
increased efficiency in the data entry process. The USTP has processed 
approximately 100,000 periodic reports on average over the past 10 
fiscal years, with each periodic report requiring 1-2 minutes of data 
entry time on average. At an estimated salary of $56/hour plus benefit 
costs, average data entry processing costs for periodic reports total 
approximately $124,000. Continuing the current process would cost 
approximately $480,000 in 2016 dollars through 2026, while the 
anticipated savings from implementing the proposed process would exceed 
the upfront implementation cost by over $150,000 during that time span. 
These savings would be sustained over time, with an annualized cost 
savings of approximately $113,000 in perpetuity. Such savings are 
critical because they will allow the USTP to redeploy scarce resources 
to other important priorities.
    In addition to the tangible cost savings expected to be generated, 
there would be a number of intangible benefits. The benefits considered 
include the benefits to the chapter 11 debtors-in-possession and 
chapter 11 trustees who are obligated to file periodic reports, as well 
as benefits to the courts, creditors, parties in interest, bankruptcy 
professionals who represent the various constituencies in the cases, 
the USTP, and external stakeholders including the public, policy-
makers, and scholars.
    The Rule benefits report filers by replacing outdated paper forms 
which vary by local jurisdiction with standardized, updated forms in an 
electronic format that promotes clarity and certainty. The Rule 
benefits the court, creditors, and other parties in interest in 
bankruptcy cases by simplifying the intake, organization, and 
understanding of these periodic reports.
    The Rule benefits professionals who represent debtors-in-possession 
in bankruptcy cases in multiple districts by reducing the burden 
associated with identifying and complying with varying local 
requirements in filing periodic reports. In other words, uniformity and 
consistency will allow these professionals to operate more efficiently 
and with greater accuracy.
    The Rule benefits the USTP by standardizing the collection of 
congressionally required data elements in an electronic format that 
facilitates automated analysis, therefore streamlining and reducing the 
time necessary to review and draw conclusions from the information 
provided on the forms.
    Lastly, the Rule benefits the public by making the collection of 
information mandated by the Bankruptcy Code and Rules more transparent, 
thereby

[[Page 82913]]

promoting greater understanding of the bankruptcy system and its 
stakeholders. Policy-makers and scholars in particular will benefit 
from the accessibility of electronic bankruptcy data, which can be more 
readily aggregated, analyzed, and shared in the updated, standardized 
format than in the current idiosyncratic local formats, which require 
manual collection and review.
    In sum, the Department is confident the Rule provides multiple 
benefits to the public, while imposing minimal initial streamlining 
costs borne by the USTP that will yield substantial cost savings in 
future fiscal years.

Regulatory Flexibility Act

    In accordance with the Regulatory Flexibility Act (5 U.S.C. 
605(b)), the Director has reviewed this Rule and by approving it 
certifies that it will not have a significant economic impact on a 
substantial number of small entities. This certification is based upon 
the fact that chapter 11 small business debtors are not required to 
complete these periodic reports. Pursuant to Section 435 of the BAPCPA, 
the Judicial Conference of the United States has developed a periodic 
report, entitled Official Form 425C ``Monthly Operating Report for 
Small Business Under Chapter 11,'' for use by small business debtors as 
defined by the Bankruptcy Code. See 11 U.S.C. 101(51D), 308.

Paperwork Reduction Act

    These periodic reports are associated with an open bankruptcy case. 
Therefore, the exemption under 5 CFR 1320.4(a)(2) applies.

Unfunded Mandates Reform Act of 1995

    This Rule does not require the preparation of an assessment 
statement in accordance with the Unfunded Mandates Reform Act of 1995, 
2 U.S.C. 1531. This Rule does not include a federal mandate that may 
result, in the aggregate, in the annual expenditure by State, local, 
and tribal governments, or by the private sector, of more than the 
annual threshold established by the Act ($123 million in 2005, adjusted 
annually for inflation). Therefore, no actions were deemed necessary 
under the provisions of the Unfunded Mandates Reform Act of 1995.

Small Business Regulatory Enforcement Fairness Act of 1996

    This Rule is not a major rule as defined by section 804 of the 
Small Business Regulatory Enforcement Fairness Act of 1996, 5 U.S.C. 
801 et seq. This Rule will not result in an annual effect on the 
economy of $100 million or more; a major increase in costs or prices; 
or significant adverse effects on competition, employment, investment, 
productivity, and innovation; or have significant adverse effects on 
the ability of United States-based companies to compete with foreign-
based companies in domestic and export markets.

Privacy Act Statement

    28 U.S.C. 589b authorizes the collection of the information in the 
periodic reports. As part of the debtor-in-possession's or trustee's 
reporting obligations, the United States Trustee will review the 
information contained in these reports. The United States Trustee will 
not share the information with any other entity unless authorized under 
the Privacy Act, 5 U.S.C. 552a et seq. EOUST has published a System of 
Records Notice that delineates the routine use exceptions authorizing 
disclosure of information. See 71 FR 59818, 59819 (Oct. 11, 2006), 
JUSTICE/UST-001, ``Bankruptcy Case Records and Associated Files.'' 
Providing this information is mandatory under 11 U.S.C. 704, 1106, and 
1107.

List of Subjects in 28 CFR Part 58

    Bankruptcy, Trusts and trustees.

    For the reasons set forth in the preamble, 28 CFR part 58 is 
amended as set forth below.

PART 58--[AMENDED]

0
1. The authority citation for part 58 continues to read as follows:

    Authority:  5 U.S.C. 301, 552; 11 U.S.C. 109(h), 111, 521(b), 
727(a)(11), 1141(d)(3), 1202; 1302, 1328(g); 28 U.S.C. 509, 510, 
586, 589b.


0
2. Add Sec.  58.8 to read as follows:


Sec.  58.8  Uniform Periodic Reports in Cases Filed Under Chapter 11 of 
Title 11.

    (a) Scope. The requirements of this section apply to all chapter 11 
debtors who do not qualify as a ``small business debtor'' under 11 
U.S.C. 101(51D). Nothing in this section shall excuse, supersede, or 
otherwise modify any applicable nonbankruptcy reporting obligations, 
including, but not limited to, those set forth in chapters 2a through 
2e of title 15 of the United States Code.
    (b) UST Form 11-MOR, Monthly Operating Report. Debtors-in-
possession (debtor) and chapter 11 trustees (trustee) must file with 
the court and serve upon the United States Trustee, any official 
committee appointed under 11 U.S.C. 1102, any governmental unit charged 
with responsibility for collection or determination of any tax arising 
out of the estate's operation, and any requesting party in interest 
monthly operating reports using UST Form 11-MOR (MOR). In jointly 
administered cases, unless otherwise required by the United States 
Trustee in the United States Trustee's discretion, each jointly 
administered debtor is required to file a separate MOR on a 
nonconsolidated basis. The MOR must contain the following:
    (1) Information about the industry classification, published by the 
Department of Commerce, for the businesses conducted by the debtor;
    (2) Length of time the case has been pending as of the end of the 
reporting period;
    (3) Number of full-time employees as of the date of the order for 
relief and at the end of each reporting period since the case was 
filed;
    (4) Cash receipts, cash disbursements, and profitability of the 
debtor during the reporting period and cumulatively since the date of 
the order for relief;
    (5) Asset and liability status as of the end of the reporting 
period;
    (6) Assets sold or transferred outside the ordinary course of 
business (with or without court approval) during the reporting period 
and cumulatively since the date of the order for relief;
    (7) Income statement, commonly referred to as a statement of 
operations, for the reporting period;
    (8) All professional fees approved by the court in the case during 
the reporting period and cumulatively since the date of the order for 
relief (separately reported, for the professional fees incurred by or 
on behalf of the debtor, between those that would have been incurred 
absent a bankruptcy case and those not);
    (9) Information about whether tax returns and tax payments since 
the date of the order for relief have been timely filed and made;
    (10) Payments made on pre-petition debt during the reporting 
period;
    (11) Payments made outside the ordinary course of business without 
court approval during the reporting period;
    (12) Payments made to or on behalf of insiders during the reporting 
period;
    (13) Postpetition borrowing during the reporting period;
    (14) Information about insurance, including workers' compensation, 
casualty/property, and general liability during the reporting period;
    (15) Information about whether disclosure statements and plans of 
reorganization have been filed with the court during the reporting 
period; and
    (16) Information about the payment of quarterly fees to the United 
States Trustee during the reporting period.

[[Page 82914]]

    (c) Individual chapter 11 debtors. Individual debtors also must 
complete Part 8 of the MOR, which includes the following:
    (1) Total income during the reporting period, including income from 
salary, wages, self-employment, and any other source;
    (2) Total expenses during the reporting period, including expenses 
related to self-employment, and unusual or significant unanticipated 
expenses;
    (3) Difference between total income in paragraph (c)(1) of this 
section and total expenses in paragraph (c)(2) of this section;
    (4) Debts (that are not related to self-employment) that were 
incurred since the petition filing date, which are past due; and
    (5) Information about whether all required domestic support 
obligation payments (as that term is defined by 11 U.S.C. 101(14A)) 
have been paid.
    (d) Supporting MOR documents. (1) Unless the United States Trustee 
in the United States Trustee's discretion provides otherwise, any non-
individual debtor or trustee must file with the court and serve upon 
the United States Trustee, any official committee appointed under 11 
U.S.C. 1102, any governmental unit charged with responsibility for 
collection or determination of any tax arising out of the estate's 
operation, and any requesting party in interest the following 
documentation:
    (i) Statement of cash receipts and disbursements that shows all 
cash receipts and cash disbursements for all bank and investment 
accounts;
    (ii) Balance sheet containing the summary and detail of the assets, 
liabilities, and equity (net worth) or deficit of the estate. The 
estate's prepetition liabilities and retained earnings must be reported 
separately from the estate's postpetition liabilities and retained 
earnings; and
    (iii) Statement of operations (profit or loss statement) that 
compares the estate's actual performance with projected performance.
    (2) At the discretion of the United States Trustee, an individual 
debtor may be required to file with the court and serve upon the United 
States Trustee, any official committee appointed under 11 U.S.C. 1102, 
any governmental unit charged with responsibility for collection or 
determination of any tax arising out of the estate's operation, and any 
requesting party in interest the documentation identified in paragraph 
(d)(1) of this section.
    (3) At the discretion of the United States Trustee, the debtor or 
trustee may be required to file with the court and serve upon the 
United States Trustee, any official committee appointed under 11 U.S.C. 
1102, any governmental unit charged with responsibility for collection 
or determination of any tax arising out of the estate's operation, and 
any requesting party in interest the following documentation:
    (i) Accounts receivable aging, which is an aged summary of accounts 
receivable including total receivables, net of doubtful accounts;
    (ii) Postpetition liabilities aging, which is an aged summary 
schedule of postpetition liabilities segregated by general payables, 
amounts owed to professionals, taxes, etc.;
    (iii) Statement of capital assets that identifies the book value of 
all capital assets on the petition date, the book value at the 
beginning of the reporting period, any additions or deletions including 
depreciation, and the book value at the end of the reporting period;
    (iv) Schedule of payments to professionals that identifies all fees 
and expenses for all professionals employed in the bankruptcy case;
    (v) Schedule of payments to insiders that includes all payments 
made by the debtor to any person or entity considered an insider under 
11 U.S.C. 101(31);
    (vi) Bank statements and bank reconciliations that reflect all bank 
accounts and banking transactions;
    (vii) Descriptions of assets sold or transferred outside the 
ordinary course of business during the reporting period, and the terms 
of such sales or transfers;
    (viii) Registers or ledgers documenting the estate's cash 
disbursements during the reporting period;
    (ix) Statement of cash flows during the reporting period;
    (x) Other transactional documents, including real estate settlement 
documents, contracts, or loan documents for the reporting period; and
    (xi) Other records.
    (e) Deadlines for filing and submitting MOR. The MOR must be filed 
with the court and submitted to the United States Trustee on a monthly 
basis. Unless otherwise provided by local rule, each MOR must be filed 
by no later than the 21st day of the month immediately following the 
reporting period covered by the MOR. The MOR must be filed every month 
until one of the following occurs:
    (1) The effective date of a confirmed plan of reorganization;
    (2) The conversion of the case to a case under another chapter; or
    (3) The dismissal of the case.
    (f) UST Form 11-PCR, Post-confirmation Report. Following the 
effective date of a confirmed plan, reorganized debtors and any other 
authorized parties who have been charged with administering the 
confirmed plan must file with the court and serve upon the United 
States Trustee, any governmental unit charged with responsibility for 
collection or determination of any tax arising out of such operation, 
and any requesting party in interest quarterly post-confirmation 
reports using UST Form 11-PCR. In jointly administered cases, unless 
otherwise required by the United States Trustee in the United States 
Trustee's discretion, each jointly administered debtor, reorganized 
debtor, or other authorized party who has been charged with 
administering a confirmed plan is required to file a separate PCR on a 
nonconsolidated basis. The PCR must contain the following:
    (1) Date the petition was filed and the date of plan confirmation;
    (2) Summary of all post-confirmation amounts disbursed. This 
summary must be segregated into disbursements during the most recent 
reporting period and total disbursements since the date of the 
confirmation order;
    (3) All preconfirmation professional fees approved by the court in 
the case for the most recent period and cumulatively since the date of 
the order for relief (separately reported, for the professional fees 
incurred by or on behalf of the debtor, between those that would have 
been incurred absent a bankruptcy case and those not);
    (4) Information regarding the recoveries of holders of claims under 
confirmed plans. This information must be expressed in aggregate dollar 
values and, in the case of claims, as a percentage of total claims of 
the class allowed;
    (5) Information on whether a final decree has been entered or is 
anticipated to be entered; and
    (6) Information about the payment of quarterly fees to the United 
States Trustee during the reporting period.
    (g) Deadlines for filing and submitting PCR. The PCR must be filed 
with the court and submitted to the United States Trustee on a 
quarterly basis. Unless otherwise provided by local rule, each PCR must 
be filed not later than the 21st day following the last day of the 
reporting (previous) quarter. The PCR must be filed every quarter until 
one of the following occurs:
    (1) The date of the final decree;
    (2) The conversion of the case to a case under another chapter; or
    (3) The dismissal of the case.
    (h) Accounting methods. Generally Accepted Accounting Principles

[[Page 82915]]

(GAAP) are required to be used when completing the Periodic Reports, 
except if the debtor used a different set of accounting standards 
prepetition or if the United States Trustee or an order of the court 
otherwise modifies the GAAP requirement. If the debtor uses GAAP 
accounting, supporting documents must comply with GAAP, such as the 
Financial Accounting Standards Board's Accounting Standards 
Codification 852, ``Reorganizations.''
    (i) Certification of Periodic Reports' accuracy. The Periodic 
Reports must be certified under penalty of perjury that they are true 
and correct by an individual who is authorized under applicable law to 
certify on behalf of the debtor, trustee, reorganized debtor, or other 
authorized party who has been charged with administering a confirmed 
plan. The debtor's, trustee's, reorganized debtor's, or other 
authorized party's attorney must maintain possession of the Periodic 
Reports with original holographic signatures for five years, unless 
otherwise provided by local rule. In addition to the obligations 
imposed by (l)(2), a pro se debtor must submit the Periodic Reports 
with original holographic signatures to the office of the United States 
Trustee in the district in which the bankruptcy case is pending.
    (j) Mandatory usage of Periodic Reports. The Periodic Reports must 
be utilized by debtors and trustees when completing their monthly 
operating reports or post-confirmation reports. The Periodic Reports 
shall be used without alteration, except as otherwise provided in this 
rule, in a particular UST Form 11-MOR or UST Form 11-PCR, or in the 
instructions for UST Form 11-MOR or UST Form 11-PCR. The Periodic 
Reports may be modified to permit minor changes not affecting wording 
or the order of presenting information. All debtors and chapter 11 
trustees serving in districts where a United States Trustee is serving 
must use the Periodic Reports in the administration of their cases, in 
the same manner and with the same content, as set forth in this Rule.
    (1) All Periodic Reports may be electronically or mechanically 
reproduced so long as the content and the form remain consistent with 
the Periodic Reports as they are posted on EOUST's website; and
    (2) The Periodic Reports shall be filed via the United States 
Bankruptcy Courts' Case Management/Electronic Case Filing System (CM/
ECF) as a ``smart form,'' meaning the reports are data-embedded.

    Dated: December 8, 2020.
Clifford J. White III,
Director, Executive Office for United States Trustees.
[FR Doc. 2020-27715 Filed 12-18-20; 8:45 am]
BILLING CODE 4410-40-P