Duties of a Chapter 11 Debtor-in-Possession

(a) (b) (c) A debtor-in-possession is responsible for strict compliance with the Bankruptcy Code, Federal Rules of Bankruptcy Procedure, and standing orders. Counsel for the debtor in possession is responsible for instructing the debtor about the U.S. trustee guidelines for a debtor-in-possession and insuring compliance with those guidelines. The debtor, its officers, and agents hold and manage the debtor's assets as fiduciaries for the estate; they must strictly comply with court orders and Bankruptcy Code §§ 363 and 1107. The debtor must prevent the depletion of the assets of the business during the proceedings, and it must notify its counsel immediately of a depletion or potential depletion.

If the debtor becomes aware of facts indicating that the continued operation of its business may not be in the best interest of the creditors or of the estate, it must immediately notify its counsel, who may immediately notify the court and recommend a solution. (d) The debtor may not use property of the estate to pay any prepetition unsecured obligation except on order. 32 (e) (f) (g) The debtor must not transfer (sell, give, move, encumber) an asset outside of the ordinary course of business except on order. The debtor must not incur administrative and priority expenses unless funds are reasonably expected to be generated to pay them.

The debtor must comply fully with Title 11's tax provisions, with the deposit requirements of the Internal Revenue Code and Regulations, and with all state tax laws. (h) The debtor must pay on a current basis all obligations incurred by it in operating its business. (i) (j) The debtor must not use cash collateral without prior written consent of the secured creditor or an order. The debtor must not pay compensation to insiders unless it has positive cash flow, all post-petition accounts paid current, including United States Trustee fees, and all monthly operating reports submitted timely.

(k) Counsel must advise the court of any knowing violation by debtor. (l) A chapter 11 debtor-in-possession shall not compensate any present or former insider within the meaning of 11 U.S.C. § 101(31) from estate assets without prior court approval. (1) A motion to compensate any present or former insider shall recite: (i) the necessity for retaining the insider; (ii) the services that the insider will perform on behalf of the estate; (iii) (iv) the amount (including any benefits) that the debtor proposes to pay to the insider, and the terms and conditions of the employment or other undertaking; all compensation, benefits and other payments that the insider has received from the debtor in the six (6) months prior to the petition; and (v) the insider's salary at the date of the petition. (2) At least one insider to receive compensation shall verify the motion.

(m) This list of duties is not exclusive, and it does not exclude unenumerated obligations imposed by law. Counsel for the debtor in possession is responsible to instruct the debtor of this rule immediately on filing the case. 33 Part V: Courts and Clerks