Practical walkthroughs of the tasks owners ask about most.

One of the very first things you must do after filing for Subchapter V is open a Debtor-in-Possession (DIP) bank account. This is not optional — you cannot keep using your pre-petition business accounts after filing.

1. Understand what it is and why it's required

A DIP account is a new account opened after your filing date. Its purpose is a clean separation between pre-petition finances and post-petition operations. Every dollar received or paid after filing must flow through DIP accounts, making your MOR cash flows transparent and auditable.

2. Find an approved bank in your district

Not all banks accept DIP accounts. The U.S. Trustee Program maintains a list of "authorized depositories" for each district. Banks that commonly accept DIP accounts:

• Wells Fargo Bank
• Bank of America
• JPMorgan Chase
• Citibank
• Many regional and community banks (check your district list)

3. Open the account with the correct title

The account must show its bankruptcy status, e.g. ABC Restaurant Group LLC, Debtor-in-Possession, Case No. 26-12345 (S.D. Tex.). Bring a copy of your petition or case number, your EIN, and standard business-account documents. The bank marks statements "DIP" — required documentation for your MOR.

4. Close or zero out pre-petition accounts

Transfer remaining balances to the DIP account, then close the old accounts. For accounts you can't close immediately (e.g. merchant processing tied to contracts), document the reason and a target closure date.

5. Keep it clean going forward

Never commingle pre- and post-petition funds. Never deposit personal money without documenting it as an "owner contribution." Never pay pre-petition debts from it without court approval. Your trustee reviews these statements every month — unexplained transactions generate questions.

One date — your petition filing date — divides your entire financial history into two categories. Getting this wrong is the most common MOR mistake and leads to trustee questions, rejected reports, and in serious cases legal problems. Everything before that date is "pre-petition"; everything from that date forward is "post-petition."

Pre-petition (before your filing date)

• Debts: what you owed before filing (credit cards, vendor invoices, loans, back rent). Addressed in your plan — generally cannot be paid without court approval.
• Assets: what you owned before filing — these are assets of the bankruptcy estate.
• Income & expenses: revenue earned and bills incurred before filing. These do not appear on your MOR income statement.

Post-petition (from your filing date forward)

• Income: all revenue earned since filing — goes on your MOR income statement.
• Expenses: all operating costs since filing — goes on your MOR income statement.
• Debts: new obligations (rent, utilities, payroll, vendors) incurred after filing — must be paid on time.

Common mistakes to avoid

• Paying a pre-petition vendor invoice without court approval
• Including pre-petition expenses in your MOR income statement
• Mixing pre-petition receivables with new receivables
• Forgetting to split invoices or payroll runs that span your filing date
• Depositing pre-petition cash into your DIP account without labeling it correctly

This schedule is the heart of your MOR: how much cash came in, how much went out, and what's left. Every number must be supported by your DIP bank account records.

1. Gather your source documents

• DIP bank statements (all accounts)
• QuickBooks bank register report per DIP account, filtered to the period
• Completed bank reconciliation (see Guide 4)
• Records for any cash transactions not captured in QuickBooks

2. Identify and total all cash receipts

A receipt is any cash or check deposited into your DIP account. Categorize each deposit: customer payments, owner contributions (a separate line — not income), loan proceeds (needs prior court approval), tax refunds, insurance proceeds, other.

3. Handle clearing accounts & month-end timing

Card processors and platforms (Stripe, Square, PayPal) often hold funds a day or two before depositing. This creates a gap between when a sale happens and when cash lands.

4. Identify and total all disbursements

A disbursement is any payment from your DIP account: checks, ACH, wires, debit-card charges, bank fees. Categorize each — payroll, payroll taxes, rent, utilities, insurance, inventory, professional fees (if court-approved), loan payments, vehicle, owner draws (separately), other.

5. Calculate the ending balance

The ending balance must match your DIP statement balance on the last day of the month, after reconciliation. If they don't match, check first for unsettled clearing-account items (Step 3). This ending balance becomes next month's beginning balance — the numbers must link with no gaps.

Reconciliation confirms your QuickBooks records match your actual bank statements. Reconcile every DIP account before filing — an unreconciled MOR is a red flag for trustees.

1. Understand why the balances differ

• Outstanding checks — written but not yet cashed; in your books, not yet on the statement.
• Deposits in transit — recorded in QuickBooks but not yet posted at the bank.
• Bank fees or charges — on the statement but not yet in QuickBooks.
• Interest earned — credited by the bank, not yet in QuickBooks.
• Errors — a data-entry mistake, or (rarely) a bank error.

2. Complete the reconciliation worksheet

3. Document and explain all differences

If a difference remains, investigate before filing — a voided-but-outstanding check, a duplicate entry, a deposit applied to the wrong account, or a bank error.

4. Attach the reconciliation to your MOR

Some districts require it attached; others just retained. Ask your attorney. Keep statements, worksheets, and supporting documents for at least 7 years or the duration of your case, whichever is longer.

A Statement of Operations (income statement, or P&L) shows revenue, expenses, and whether you made a profit or loss for the period. An accurate one strengthens your MOR and helps sanity-check the cash numbers on Part 2.

1. Export from QuickBooks

Reports → Profit and Loss. Set the date range to the reporting month (post-petition dates only). Keep your accounting basis (cash or accrual) consistent month to month and matched to how you report cash on Part 2.

2. Organize by expense category

• Revenue / sales
• Cost of goods sold (if applicable)
• Payroll and payroll taxes
• Rent or lease
• Insurance
• Professional fees (attorney, accountant, trustee)
• Depreciation (accrual basis only)
• All other operating expenses

3. Exclude pre-petition amounts

Filter the report to start on your petition date so it lines up with the post-petition-only cash activity on Part 2.

4. Keep cumulative totals for your own tracking

A running year-to-date P&L since your petition date makes it much easier to support your Part 7 projections and answer trustee questions about trends.

The balance sheet is a snapshot of your financial position on the last day of the month: what you own (assets), what you owe (liabilities), and net worth (equity). Total Assets must always equal Total Liabilities + Equity — if it doesn't balance, there's an error.

1. Current assets

• Cash & equivalents: ending balance of all DIP accounts (should tie to line 23, Part 2)
• Accounts receivable (net): ties to line 25, Part 4
• Inventory: current cost of unsold goods (if applicable)
• Prepaid expenses: amounts paid in advance, not yet used (prorate the unused portion)

2. Fixed assets

Equipment, vehicles, and leasehold improvements at original cost, less accumulated depreciation = net fixed assets.

3. Liabilities — keep pre- and post-petition separate

• Post-petition: accounts payable (ties to line 24), accrued payroll, accrued payroll taxes, other accrued expenses, new court-approved financing.
• Pre-petition: use the amounts from your filed schedules (Schedule D secured; Schedule E/F priority & unsecured) — these generally don't change month to month.

4. Equity

Opening equity (from your schedules) + net income for the period − owner draws/distributions = ending equity.

1. Run a receivables report from QuickBooks

Reports → Accounts Receivable Aging Detail, dated the last day of the month. This gives the customer-by-customer detail for Exhibit F.

2. Build Exhibit F

For each customer with an open balance: name, amount owed, when payment is due. Total these — the total goes on line 25.

3. Keep your own pre/post-petition split

Even though line 25 combines them, track pre- and post-petition separately (a QuickBooks class or tag) to answer trustee questions and support Part 7. Collecting pre-petition receivables is generally permissible in the ordinary course; the cash goes into your DIP account and is reported as a receipt (line 20).

4. Flag aged or doubtful balances

For balances over ~90 days or in dispute, be ready to explain collection steps taken, whether the customer disputes the debt, whether you've written it off, and whether a payment arrangement is in place.

1. Identify post-petition unpaid bills

Vendor invoices, utilities, professional fees, and other obligations incurred after filing that remain unpaid at month-end. These are administrative expenses and generally must be paid in full before a plan can be confirmed.

2. Build Exhibit E

For each unpaid post-petition debt: date incurred, who is owed, purpose, and when it's due. Total these — the total goes on line 24.

3. Don't include pre-petition payables

Debts owed before filing appear in your schedules (Schedule D and E/F), not on line 24. Keep them clearly separated in your books.

4. Critical-vendor payments are the narrow exception

Courts sometimes authorize paying a specific pre-petition balance where the vendor is essential and refuses to keep supplying. These "critical vendor" payments require a court order first. Discuss with your attorney before paying; if approved, disclose it on line 17 and explain it in Exhibit A.

Part 7 does two things every month: it compares last month's projection to this month's actual results, and it asks you to project next month. Skipping it is a common, easily avoidable error.

1. Carry forward last month's projection

Pull lines 35–37 from last month's filed MOR (projected receipts, disbursements, net cash flow). These become Column A ("Projected") on lines 32–34 of this month's report.

2. Fill in actual results and the difference

Column B ("Actual") is copied from lines 20–22 of this same report. Column C ("Difference") is Column A − Column B, for receipts (line 32), disbursements (line 33), and net cash flow (line 34).

3. Build next month's projection

Lines 35–37. The form doesn't prescribe a method. A defensible approach: start with a trailing 1–3 month average of actuals, adjust for known changes (a contract starting/ending, a one-time expense, seasonality, a price change), and keep a short written note of your assumptions.

4. Explain large variances

If Column C shows a big difference, be ready to explain why — a lost customer, an unexpected repair, a delayed payment, a new hire. Trustees use this to gauge how reliable your forecasting is and how stable the business is, which matters when demonstrating your plan is feasible.

1. What you must pay and when

• Federal income tax withholding — per your IRS deposit schedule
• Employee & employer Social Security and Medicare (FICA) — same schedule
• Federal Unemployment Tax (FUTA) — quarterly on Form 940
• State income tax withholding — varies by state
• State unemployment insurance (SUTA) — varies by state
• Local taxes — applicable in some cities

2. What to report on the MOR

• Number of employees (full- and part-time) at month-end
• Total gross wages paid
• Total payroll taxes withheld and total employer payroll taxes paid
• Total net payroll distributed
• Whether all payroll taxes were deposited on time (with explanation if not)
• Owner/principal compensation — disclosed separately

3. Sales tax (if applicable)

Sales tax collected is held in trust for the state and must be remitted on your regular schedule. Report total collected, total remitted, and any outstanding balance (prior-period unpaid sales tax requires explanation).

4. Owner compensation

Salary, draws, or distributions must be disclosed on every MOR — courts scrutinize this because it reduces funds available to creditors. Compensation above pre-petition levels, or while operating at a loss, may require court approval. Ask your attorney before changing it.

The MOR is due by the 21st of the following month. That sounds like plenty of time, but statements, QuickBooks cleanup, attorney review, and filing all take time. Missing the deadline — even once — can create serious problems.

Days 1–5 · Gather documents

• Wait for all DIP bank statements (typically 1–5 business days after month-end)
• Download and import into QuickBooks
• Match and categorize all imported transactions; enter anything that didn't import

Days 6–10 · Reconcile and generate reports

• Reconcile every DIP account (Guide 4)
• Export P&L, Balance Sheet, AR Aging, and AP Aging
• Compile the disbursements list (payee, date, amount, purpose)

Days 11–15 · Complete and review

• Transfer numbers into Form 425C (or let Chapter11Ready generate it)
• Add cumulative totals; answer all questionnaire items; write Exhibit explanations
• Check for obvious errors (does the balance sheet balance? does ending cash match the bank statement?)
• Have your bookkeeper or CPA review the draft

Days 16–19 · Attorney review

• Send the draft to your attorney; address corrections
• Sign under penalty of perjury; assemble all attachments

Days 19–21 · File and confirm

• Your attorney files through PACER/CM-ECF
• Save the court confirmation and a full copy of the filed MOR
• Begin tracking the beginning balance for next month

Your trustee receives a copy of your MOR every month. Their job is to evaluate whether your business is operating as a going concern, whether finances are reported accurately, and whether your plan is feasible.

Financial-health indicators they watch

• Cash trend: growing, stable, or declining? Consistent decline suggests the business may not be viable.
• Gross margin: is revenue covering cost of goods sold?
• Operating profit/loss: consistent losses raise plan-feasibility questions.
• Post-petition AP aging: accumulating unpaid post-petition payables is a serious red flag.
• Owner compensation: reasonable given the business's performance?

Compliance items they always check

• Are all payroll taxes paid and current?
• Are all insurance policies current?
• Are all bank accounts identified, and DIP accounts properly titled?
• Do the numbers tie — ending cash to the bank statement, and does the balance sheet balance?

Questionnaire answers that trigger follow-up

• "Yes, we paid a pre-petition creditor" — was there a court order?
• "Yes, we sold an asset" — was it court-approved?
• "Yes, we borrowed new money" — court-approved?
• "No, we did not pay all payroll taxes on time" — immediate concern.