§ 33.1     Special Information Needs In Business Cases
Cite as:    Keith M. Lundin, Lundin On Chapter 13, § 33.1, at ¶ ____, LundinOnChapter13.com (last visited __________).

A Chapter 13 debtor engaged in business1 must complete questions 19 through 25 of Official Bankruptcy Form 7, the statement of financial affairs, in addition to the forms and schedules required of a nonbusiness debtor.2 Also, after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA),3 business debtors have new problems accounting for business income and expenses on Official Form B22C.4


To complete Official Bankruptcy Form 7, counsel must collect much additional information. The books and records of the business and any financial statements must be located and described. The business inventory must be accounted for, and any physical inventory of business property must be revealed. The names and addresses of current and former partners, officers, directors and shareholders must be listed.


Debtor’s counsel should anticipate the special information requirements of the Chapter 13 trustee in a business case. In business cases, to perform the duties in 11 U.S.C. § 1302(c),5 the Chapter 13 trustee will often require an interview with the debtor and may review the debtor’s books and records, the debtor’s tax returns for at least two years, any inventory of the debtor’s business, financial statements, schedule of accounts receivable and accounts payable, bank accounts, insurance policies and a pro forma statement for operation of the business during the Chapter 13 case. The standardized “Report of Trustee of a Debtor Engaged in Business” prepared by the trustee in many districts is a blueprint available to debtor’s counsel to assist in collecting information from the business debtor.


The substantial increase in the debt limitations for Chapter 13 in 1994 and the automatic upward adjustments in 1998, 2001, 2004, and 20076 may bring more business debtors into Chapter 13 cases. Individuals engaged in business are somewhat more likely to have greater debt loads than other debtors. The increase in the debt limits may make Chapter 13 available to a broader pool of debtors engaged in business. It is likely that the increase in debt limitations will expose debtors’ counsel to more cases in which the special information needs of debtors engaged in business must be managed.


1  See §§ 7.2 [ Sole Proprietorships Are Eligible ] § 10.2  Sole Proprietorships Are Eligible and 9.1 [ Self-Employment ] § 12.1  Self-Employment for discussion of eligibility of debtor engaged in business. See also §§ 57.1 [ Operating a Chapter 13 Debtor Engaged in Business ] § 52.1  Operating a Chapter 13 Debtor Engaged in Business and 57.2 [ Additional Filing and Reporting Requirements ] § 52.2  Additional Filing and Reporting Requirements for powers and duties of debtor engaged in business.


2  See § 36.8 [ Statement of Financial Affairs for Debtor Engaged in Business ] § 36.31  Statement of Financial Affairs for Debtor Engaged in Business.


3  Pub. L. No. 109-8, 119 Stat. 23 (2005).


4  See §§ 379.1 [ Form B22C: Statement of Current Monthly Income ] § 36.19  Form 122C-1: Statement of Current Monthly Income380.1 [ Form B22C: Disposable Income Calculation ] § 36.21  Form 122C-2: Disposable Income Calculation, 468.1 [ Current Monthly Income: The Baseline ] § 92.3  Current Monthly Income: The Baseline and 477.12 [ Other [Necessary] Expenses—Unsecured Debts ] § 95.15  Other [Necessary] Expenses—Unsecured Debts.


5  If the debtor is engaged in business, the Chapter 13 trustee must perform the duties found in 11 U.S.C. § 1106(a)(3) and (a)(4)—investigating the past conduct, assets, liabilities and financial condition of the debtor and the debtor’s business and filing a statement of that investigation. See §§ 57.1 [ Operating a Chapter 13 Debtor Engaged in Business ] § 52.1  Operating a Chapter 13 Debtor Engaged in Business and 57.2 [ Additional Filing and Reporting Requirements ] § 52.2  Additional Filing and Reporting Requirements.


6  See § 11.1 [ Dollar Amounts ] § 14.1  Dollar Amounts.