First-Day Motions In Individual Debtor Chapter 11 Cases

by Daniel M. Press and Brett Weiss

Excerpt:

Virtually every significant corporate chapter 11 case begins with a series of "first-day motions," or motions filed at the same time as the petition, seeking what is often effectively case-dispositive relief. Most individual cases do not require this type of motion. However, it is often critical to the case that certain matters be dealt with immediately. This article addresses a number of first-day motions that may be appropriate in a typical individual chapter 11 case.

Application to Employ Counsel and Other Professionals

The first motion that should be filed in every chapter 11 case is an Application to Employ Counsel, and, if necessary, other professionals for the Debtor in Possession (DIP) (including accountants, brokers, and appraisers) pursuant to section 327(a) and Bankruptcy Rule 2014. As delay in filing an application to employ can result in counsel not getting paid for work performed before the appointment, it is critical to file the application as soon as practicable, if possible before services are rendered. While nunc pro tunc ("now for then") after-the-fact applications for employment can be considered, the standard is high and requires at least excusable neglect, if not extraordinary circumstances, to retroactively approve appointment of counsel and other professionals.

Motion to Use Cash Collateral

If, as is the case with many individual chapter 11 debtors, the estate owns and operates rental real estate, or the debtor is self-employed, there is likely to be a need to use cash collateral. Under section 363(a) of the Bankruptcy Code, cash collateral is defined as:

cash, negotiable instruments, documents of title, securities, deposit accounts, or other cash equivalents whenever acquired in which the estate and an entity other than the estate have an interest and includes the proceeds, products, offspring, rents, or profits of property and the fees, charges, accounts or other payments for the use or occupancy of rooms and other public facilities in hotels, motels, or other lodging properties subject to a security interest as provided in section 552 (b) of this title, whether existing before or after the commencement of a case under this title.

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Daniel M. Press is a bankruptcy lawyer with the law firm of Chung & Press, P.C., in McLean Virginia, and Cumberland and Greenbelt, Maryland. A 1988 magna cum laude graduate of Georgetown University Law Center, he was an editor of the Georgetown Law Journal. He received his B.A. from The Johns Hopkins University. After graduating from law school, Mr. Press served as a judicial law clerk for Judge Jaime Pieras Jr. in the U.S. District Court for the District of Puerto Rico.

Mr. Press practices in the Bankruptcy and Federal District Courts in Maryland, the District of Columbia, and the Eastern and Western Districts of Virginia, as well as other U.S. Appellate, District and Bankruptcy Courts around the country. He is a State Chair for the National Association of Consumer Bankruptcy Attorneys, a contributing attorney with the Bankruptcy Law Network, and is a member of the Section Council of the Consumer Bankruptcy Section of the Maryland State Bar Association. He is a regular speaker on bankruptcy and related topics at Continuing Legal Education seminars and programs locally and nationwide.

Brett Weiss has experience in complex individual chapter 7, chapter 11 and chapter 13 bankruptcy cases, and in chapter 11 small business restructuring and reorganization. He represents individual and corporate debtors and creditors in all phases of bankruptcy.

Mr. Weiss is currently the managing partner at Chung & Press, LLC in Greenbelt, Maryland.

Mr. Weiss has received international media attention in connection with the bankruptcy cases he had handled. He has been inter-viewed by Barbara Walters on The View, appeared on the Montel Williams Show, the Today Show, Good Morning America, ABC News with Peter Jennings and German State television, been interviewed on the BBC World Service, appeared on numerous local radio and television programs, and been quoted in Money magazine, The New York Times, The Washington Post and The Baltimore Sun, among others. At the invitation of John Conyers, Jr., Chairman of the House Judiciary Committee, he has twice testified before Congress on bankruptcy and credit issues.

Mr. Weiss has been involved in a number of cases of first impression, with opinions issued by the U.S. Bankruptcy Court, the Maryland Court of Appeals, and the U.S. Court of appeals. He regularly lectures across the country on various aspects of bankruptcy law.