Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 82905 

Adoption of the Amendment 

In consideration of the foregoing, the 

Federal Aviation Administration 

amends 14 CFR part 71 as follows: 

PART 71—DESIGNATION OF CLASS A, 

B, C, D, AND E AIRSPACE AREAS; AIR 

TRAFFIC SERVICE ROUTES; AND 

REPORTING POINTS 

■ 1. The authority citation for part 71 

continues to read as follows: 

Authority: 49 U.S.C. 106(f), 106(g); 40103, 

40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 

1959–1963 Comp., p. 389. 

§ 71.1 [Amended] 

■ 2. The incorporation by reference in 

14 CFR 71.1 of FAA Order 7400.11E, 

Airspace Designations and Reporting 

Points, dated July 21, 2020, and 

effective September 15, 2020, is 

amended as follows: 

Paragraph 6005 Class E Airspace Areas 

Extending Upward From 700 Feet or More 

Above the Surface of the Earth. 

* * * * * 

ASW TX E5 Mineola, TX [Amended] 

Mineola Wisener Field, TX 

(Lat. 32°40′36′′ N, long. 95°30′39′′ W) 

Wood County Airport-Collins Field, TX 

(Lat. 32°44′32′′ N, long. 95°29′47′′ W) 

That airspace extending upward from 700 

feet above the surface within a 6-mile radius 

of Mineola Wisener Field, and within a 6.4- 

mile radius of Wood County Airport-Collins 

Field, and within 3.8 miles east and 5.7 miles 

west of the 182° bearing from the Wood 

County Airport-Collins Field extending from 

the 6.4-mile radius of Wood County AirportCollins Field to 21.3 miles south of Wood 

County Airport-Collins Field. 

* * * * * 

ASW TX E5 Kenedy, TX [Amended] 

Kenedy Regional Airport, TX 

(Lat. 28°49′30′′ N, long. 97°51′56′′ W) 

That airspace extending upward from 700 

feet above the surface within a 6.3-mile 

radius of Kenedy Regional Airport. 

Issued in Fort Worth, Texas, on December 

15, 2020. 

Martin A. Skinner, 

Acting Manager, Operations Support Group, 

ATO Central Service Center. 

[FR Doc. 2020–27923 Filed 12–18–20; 8:45 am] 

BILLING CODE 4910–13–P 

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. 

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 

82906 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 

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 dataembedded 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, debtorsin-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-ininterest 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 

Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 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 nondisclosure 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 nonindividual 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 dataembedded.’’ 

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. 

82908 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 

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 

(§ 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 (§§ 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 

Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 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 (§ 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 

(§§ 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 (§ 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 

82910 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 

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 

(§ 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 nonindividual 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 (§ 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 (§§ 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 

Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 82911 

swaps and other derivatives are not 

considered insurance for the purposes 

of the MORs. 

6. Payments Made on Prepetition Debt 

(§ 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 

(§ 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 

(§ 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 (§ 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 (§ 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 (§ 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 § 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 §§ 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 

82912 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 

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 

§ 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-inpossession 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 policymakers, 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 

Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 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 Statesbased 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 debtorin-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] 

■ 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. 

■ 2. Add § 58.8 to read as follows: 

§ 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. 

82914 Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 

(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 selfemployment) 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, Postconfirmation 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 postconfirmation 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 

Federal Register / Vol. 85, No. 245 / Monday, December 21, 2020 / Rules and Regulations 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 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 165 

[Docket Number USCG–2020–0639] 

RIN 1625–AA00 

Safety Zone; Narragansett Bay, 

Quonset, RI 

AGENCY: Coast Guard, DHS. 

ACTION: Temporary interim rule and 

request for comments. 

SUMMARY: The Coast Guard is 

establishing a temporary safety zone on 

the navigable waters within a 1,700 foot 

radius of the barge M. J. VERROCHI 

located in Narragansett Bay, Quonset, 

RI. The safety zone is needed to protect 

personnel, vessels, and the marine 

environment from the potential hazards 

created by dredging operations that 

include drilling and blasting. When 

enforced, entry of vessels or persons 

into this zone is prohibited unless 

specifically authorized by the Captain of 

the Port, Southeastern New England or 

designated representative. 

DATES: 

Effective date: This rule is effective 

from December 30, 2020 through 

January 31, 2021. 

Comments due date: Comments and 

related material must be received by the 

Coast Guard on or before December 31, 

2020. 

ADDRESSES: To view documents 

mentioned in this preamble as being 

available in the docket, go to http://

www.regulations.gov, type USCG–2020– 

0639 in the ‘‘SEARCH’’ box and click 

‘‘SEARCH.’’ Click on Open Docket 

Folder on the line associated with this 

rule. You may submit comments 

identified by docket number USCG– 

2020–0639 using the Federal 

eRulemaking Portal at http://

www.regulations.gov. See the ‘‘Public 

Participation and Request for 

Comments’’ portion for further 

instructions on submitting comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this rule, call or 

email the Waterways Management 

Division, U.S. Coast Guard Sector 

Southeastern New England, telephone 

401–435–2342, email SENEWWM@

uscg.mil. 

SUPPLEMENTARY INFORMATION: 

I. Table of Abbreviations 

CFR Code of Federal Regulations 

COTP Captain of the Port 

DHS Department of Homeland Security 

FR Federal Register 

NPRM Notice of Proposed Rule Making 

§ Section 

U.S.C. United States Code 

II. Background Information and 

Regulatory History 

The Coast Guard is issuing this 

temporary rule without prior notice and 

opportunity to comment pursuant to 

authority under section 4(a) of the 

Administrative Procedure Act (APA) (5 

U.S.C. 553(b)). This provision 

authorizes an agency to issue a rule 

without prior notice and opportunity to 

comment when the agency for good 

cause finds that those procedures are 

‘‘impracticable, unnecessary, or contrary 

to the public interest.’’ Under 5 U.S.C. 

553(b)(B), the Coast Guard finds that 

good cause exists for not publishing a 

Notice of Proposed Rulemaking (NPRM) 

with respect to this rule because it is 

impracticable. The Coast Guard did not 

receive sufficient details to evaluate the 

drilling and blasting in Narragansett Bay 

until November 23, 2020. It is 

impracticable to publish an NPRM 

because we must establish this safety 

zone by December 30, 2020, but lack 

sufficient time to collect public 

comments and to address them before 

issuing the rule. 

Under 5 U.S.C. 553(d)(3), the Coast 

Guard finds that good cause exists for 

making it effective less than 30 days 

after publication in the Federal 

Register. For reasons stated in the 

preceding paragraph, delaying the 

effective date of this rule would be 

impracticable and contrary to the public 

interest because timely action is needed 

to respond to the potential safety 

hazards associated with the drill and 

blast project. 

III. Legal Authority and Need for Rule 

The Coast Guard is issuing this rule 

under authority in 46 U.S.C. 70034 

(previously 33 U.S.C. 1231). The 

Captain of the Port (COTP) Sector 

Southeastern New England has 

determined that potential hazards exist 

with the loading of explosives, transit of 

explosives and storage of explosives on 

the barge M. J. VERROCHI during the 

drill and blast project. This rule is 

needed to protect personnel, vessels, 

and the marine environment in the 

navigable waters within the safety zone.