3C's Blessing, Inc. d/b/a Little Ceasars

UNITED STATES BANKRUPTCY COURT
SOUTHERN DISTRICT OF NEW YORK
In re:
3C’s BLESSING, INC.
Debtor.
FOR PUBLICATION
Case No. 19-10830 (MG)
Chapter 11
MEMORANDUM OPINION AND ORDER GRANTING IN PART AND DENYING IN
PART DEBTOR’S MOTION TO USE PREEXISTING BUSINESS FORMS
A P P E A R A N C E S:
CUSHNER & ASSOCIATES, P.C.
Attorneys for Debtor
399 Knollwood Rd
White Plains, NY 10603
By: 	Todd S. Cushner, Esq.
James J. Rufo, Esq.
UNITED STATES TRUSTEE FOR REGION 2
Office of United States Trustee
201 Varick Street, Suite 1006
New York, NY 10014-4811
By: 	Shannon Scott, Esq.
MARTIN GLENN
UNITED STATES BANKRUPTCY JUDGE
The Debtor in this small business chapter 11 case filed a motion seeking authorization to
use its preexisting business forms, specifically a balance sheet and income statement, in lieu of
Official Form 425C. (“Motion,” ECF Doc. # 18.) The Debtor is a franchisee of Little Caesar
Enterprises. It operates five Little Caesars Pizza restaurants. As a franchisee, the Debtor is
required to prepare its financial reports using four-week reporting intervals, rather than monthly
reporting intervals, meaning that the Debtor prepares 13 reports annually instead of the typical
12 reports. The Debtor’s financial reporting computer software is geared to this four-week
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reporting cycle. The U.S. Trustee Guidelines, however, require debtors to prepare monthly
operating reports using Official Form 425C. 1
The Debtor’s Motion argues that utilizing Official Form 425C would be unreasonably
burdensome. The Court disagrees; nonetheless, as explained below, the Court will permit the
Debtor to report based on its four-week reporting intervals.
I. 	LEGAL STANDARD
Small business debtors have unique reporting obligations in chapter 11 cases under the
Bankruptcy Code and Rules. See 11 U.S.C. § 308 and FED. R. BANKR. P. 2015(a)(6). A small
business debtor means:
. . . a person engaged in commercial or business activities . . . that has aggregate
noncontingent liquidated secured and unsecured debts as of the date of the petition
or the date of the filing of the order for relief in an amount not more than $2,566,050
. . . for a case in which the United States trustee has not appointed . . . a committee
of unsecured creditors or where the court has determined that the committee of
unsecured creditors is not sufficiently active and representative to provide effective
oversight of the debtor . . . .
11 U.S.C. § 101(51D). A person is “an individual, partnership, and corporation . . . .” 11 U.S.C.
§ 101(41).
Bankruptcy Rule 2015 is titled “Duty to Keep Records, Make Reports, and Give Notice
of Case or Change of Status.” FED. R. BANKR. P. 2015. Rule 2015(a)(6) requires a debtor in
possession in a chapter 11 small business case to file and transmit to the United States trustee, for
each calendar month after the order for relief, on the appropriate Official Form, the report
required by section 308, unless the court, for cause, sets another reporting interval. FED. R.
BANKR. P. 2015(a)(6) (“A trustee or debtor in possession shall: . . . (6) in a chapter 11 small
1 	United States Department of Justice, Office of the United States Trustee, Region 2 – New York,
Connecticut and Vermont, Operating Guidelines and Reporting Requirements for Debtors In Possession and
Trustees 1, 4, https://www.justice.gov/ust-regions-r02/file/region_2_operating_guidelines.pdf/download.
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business case, unless the court, for cause, sets another reporting interval, file and transmit to the
United States trustee for each calendar month after the order for relief, on the appropriate
Official Form, the report required by § 308.”) (emphasis added).
Section 308 of the Bankruptcy Code states that a “debtor in a small business case shall
file periodic financial and other reports containing information” concerning:
1. 	the debtor’s profitability;
2. 	reasonable approximations of the debtor’s projected cash receipts and
cash disbursement over a reasonable period;
3. 	comparisons of actual cash receipts and disbursement with projections
in prior reports;
4. 	whether the debtor is –
(A) in 	compliance 	in 	all 	material 	respects 	with 	postpetition
requirements imposed by this title and the Federal Rules of
Bankruptcy Procedure; and
(B) timely filing tax returns and other required governmental filings
and paying taxes and other administrative expenses when due;
5. 	if the debtor is not in compliance . . . , what the failures are and how, at
what cost, and when the debtor intends to remedy such failures; and
6. 	such other matters as are in the best interests of the debtor and creditors,
and in the public interest in fair and efficient procedures under chapter
11 of this title.
11 U.S.C. § 308(b).
Financial reporting must be completed using Official Form 425C. In addition, the UST
Guidelines for Region 2 require the debtor to file “an original monthly operating report with the
Clerk of the Bankruptcy Court, and serve a paper copy upon the United States Trustee.”2 The
UST Guidelines state that the monthly operating report must be prepared using its form—
namely, Official Form 425C. 3
2 	Id.
3 	Id. (“The monthly operating reports must be prepared using the forms provided herein. These forms are
also located on our website[.]”). The U.S. Trustee’s website contains a monthly operating report for small business
(Footnote continued on next page)
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II. 	ANALYSIS
The Debtor is a small business debtor as defined in 11 U.S.C. § 101(51D). (ECF Doc. #
1 ¶ 8.) Therefore, it must comply with Rule 2015(a)(6) and file Official Form 425C either
monthly or on the intervals approved by the Court until “the effective date of the plan, or
conversion or dismissal of the case.” F ED. R. BANKR. P. 2015(a)(6). While the default rule is
monthly reporting, the Court may alter the reporting intervals for good cause shown.
While courts in prior cases in this District have applied section 105 of the Bankruptcy
Code to excuse compliance with various requirements in the UST Guidelines, no cases cited to
the Court have excused a small business debtor from using Official Form 425C. Unless the U.S.
Trustee agrees otherwise, standardization of reporting, particularly in small business cases, is
important in simplifying the U.S. Trustee’s monitoring responsibilities in the large number of
small business cases filed in this Circuit.
The Debtor alleges that filing the Form 425C report will have a negative impact on the
Debtor’s reorganization efforts. The Court does not believe that requiring the use of Official
Form 425C imposes an unreasonable burden on this Debtor. The Debtor states that requiring it
to use Official Form 425C would require it to “change its Business Forms.” (Motion ¶ 12.) But
the Debtor can use the information in its existing business forms to complete Official Form
425C. The Debtor explains that its financial reporting—required by the franchisor—is based on
four-week reporting intervals, rather than monthly reporting intervals. (Motion ¶ 9.) While
Official Form 425C generally calls for monthly financial reporting, as already explained, Rule
2015(a)(6) specifically authorizes the Court to adjust the reporting intervals. Here, the Debtor
debtors to use. See United States Department of Justice, Office of the United States Trustee, Region 2 – New York,
Connecticut and Vermont, Monthly Operating Report, Small Business, https://www.justice.gov/ust-regions-
r02/file/small_business_mor.pdf/download.
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has established good cause to adjust the reporting intervals from monthly to every four weeks.
This will allow the Debtor to avoid having to modify its financial reporting software for use in
preparing reports on Official Form 425C. The burden of filing additional reports is not
substantial.
Official Form 425C requires the Debtor to provide additional information that is not
contained in the Debtor’s existing business forms. For example, Official Form 425C asks
whether a debtor has timely (i) paid all of its bills, (ii) paid its employees on time, (iii) filed and
paid tax returns, and (iv) paid its insurance premiums While not all of this information is readily
identifiable in the Debtor’s existing business forms, this required information is essential for the
U.S. Trustee to carry out its important monitoring role in small business cases.
Official Form 425C also requires the Debtor to attach documents, such as bank
statements and financial reports, including income statements (profit & loss) and balance sheets.
The Debtor’s business forms include a balance sheet and income statement. These documents
must be attached to Official Form 425C; they supplement the information provided in Official
Form 425C rather than replace the Form. Lastly, while Rule 2015(a)(6) expressly permits the
Court to adjust the reporting intervals for cause, it does not authorize the Court to excuse a
debtor from using Official Form 425C.
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III. 	CONCLUSION
For the reasons explained above, the Debtor’s Motion is GRANTED IN PART AND
DENIED IN PART. The Debtor must use Official Form 425C in its reports, but it may utilize
four-week intervals in completing the reports. rather than monthly intervals.
IT IS SO ORDERED.
Dated: 	April 10, 2019
New York, New York
_____Martin Glenn____________
MARTIN GLENN
United States Bankruptcy Judge
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