The Bankruptcy Petition and First-Day Motions

Introduction

The first 72 hours of a Chapter 11 case determine whether the company can keep operating. The petition is filed (a procedurally simple step that triggers the automatic stay the moment of filing); the first-day motion package is filed simultaneously seeking emergency court relief on critical operational issues; the bankruptcy judge holds the first-day hearing within 24-48 hours; and the resulting interim orders let the business continue paying employees, vendors, utilities, and other essential expenses without a single day of operational disruption. The first-day relief is the bridge between pre-petition operations and the post-petition operating phase, and getting it right is one of the most consequential pre-filing deliverables.

The First Brands case illustrates the modern first-day machinery at scale. The company filed on September 28, 2025 in the Southern District of Texas with assets of $1 billion to $10 billion and liabilities of $10 billion to $50 billion across 98 affiliated debtor entities. The first-day hearing was held on October 1, 2025 at 10:00 a.m. CT. The court approved interim relief on the customary first-day motions and released $500 million against the $1.1 billion DIP commitment, sufficient to fund operations through the second-day hearing. The final hearing took place on November 6, 2025 at 9:00 a.m. CT, releasing the remaining DIP capacity. The 39-day gap between interim and final approval is the standard rhythm for a complex case, and it gives the U.S. Trustee, the unsecured creditors committee (appointed in late October), and other parties time to scrutinize the DIP terms before final approval.

This article walks through the petition mechanics, the schedules and supporting documents, the first-day motion package in detail (15-25 motions across payroll, cash management, utilities, critical vendors, customer programs, taxes, insurance, professional retention, and DIP financing), the first-day hearing procedures, the interim-vs-final approval framework, and why the first 72 hours are so consequential for case outcomes.

A voluntary Chapter 11 petition is filed using Official Form 201 (for non-individual debtors) along with the supporting schedules and statement of financial affairs required by Bankruptcy Rule 1007. The petition itself is a one-page document containing the debtor's basic information (legal name, headquarters, EIN, NAICS code), the chapter under which relief is sought (here, Chapter 11), an indication of whether the case is voluntary or involuntary, and signature lines. The petition is filed electronically through the bankruptcy court's CM/ECF system, with a filing fee of approximately $1,738 for a Chapter 11 case.

Voluntary Chapter 11 Petition

A voluntary petition under Chapter 11 of the U.S. Bankruptcy Code, filed using Official Form 201 by a non-individual debtor (corporation, LLC, partnership, or other business entity). The petition triggers the automatic stay under Section 362 at the moment of filing, halting almost all collection actions, contract terminations, and litigation against the debtor. The debtor remains in possession of its assets and operations as the "debtor in possession" with the rights and powers of a trustee under Sections 1107 and 1108. The filing also commences the case docket, the case caption, and the appointment process for the U.S. Trustee oversight role. Approximately 99% of corporate Chapter 11 cases are voluntary; involuntary petitions are rare and require specific creditor coordination under Section 303.

The petition itself does not bind the debtor to any plan or substantive treatment of creditors. Those decisions come later through the disclosure statement, the plan of reorganization, and the confirmation order. The petition's principal function is procedural: it commences the case, attaches the automatic stay, and triggers the various deadlines and procedural mechanics that govern the case from that point forward.

Within 14 days of the petition (sometimes extended), the debtor must file the comprehensive schedules and supporting statements that give creditors and the court a detailed view of the company's pre-petition financial position. The required documents include:

The schedules are extensive (often hundreds of pages for large complex debtors) and require detailed reconciliation of the company's books. The work typically falls to the company's CFO and financial controllers working with the bankruptcy counsel's restructuring team. Schedule preparation is one of the most labor-intensive aspects of pre-filing work, and the schedules become the foundational reference for claims analysis, recovery modeling, and plan classification throughout the case.

The first-day motion package is the substantive heart of the petition filing. The package typically contains 15-25 separate motions seeking emergency court relief on operational matters that would otherwise be disrupted by the automatic stay. Each motion is supported by a declaration from a senior officer (usually the chief restructuring officer or the CFO) explaining why the relief is necessary and what specific authority is sought. The motion package can run 1,500-3,000 pages including exhibits.

The motions divide into three functional categories: operational motions (keeping the business running normally), case-administration motions (managing the procedural mechanics of the case), and financing motions (most importantly, interim DIP approval). The exact composition varies based on the company's industry, capital structure, and operational complexity, but a typical package includes roughly the same set of categories.

The first-day motion package always includes specific motions covering the operational areas that are most vulnerable to immediate disruption when the automatic stay attaches.

Wages, salaries, and benefits

Authorization to pay pre-petition wages, salaries, accrued vacation, expense reimbursements, payroll taxes, and benefits programs (health insurance, 401(k), severance). The motion is typically approved on an interim basis with full approval at the second-day hearing. Without this relief, employees would have unpaid pre-petition wages as general unsecured claims, which would prompt many to walk off the job. The Bankruptcy Code's Section 507(a)(4) gives wage claims priority status up to $17,150 per employee (effective for cases filed on or after April 1, 2025; up from $15,150 under the prior cycle, adjusted for inflation under Section 104), but motion authorization removes any uncertainty.

Cash management and existing bank accounts

Authorization to continue using existing bank accounts, the existing cash management system, intercompany cash flows among debtor entities, and existing investment policies. The U.S. Trustee Operating Guidelines technically require new "debtor in possession" bank accounts, but in practice the cash management motion almost always preserves the existing system to avoid operational chaos. The motion typically includes specific protections for cash collateral and adequate-protection payments to secured lenders.

Cash collateral motion (Section 363(c))

Section 363(c)(2) prohibits the debtor from using "cash collateral" (cash, deposit accounts, and other cash equivalents in which a secured party has an interest, including proceeds and rents from collateral) without secured party consent or court authorization upon adequate protection. Almost every Chapter 11 debtor needs immediate use of cash collateral to fund payroll, vendor payments, and operating costs from day one, which makes the cash collateral motion one of the most critical first-day filings. The standard order proceeds in two phases: an interim cash collateral order entered first-day or shortly thereafter authorizing limited use of cash collateral through a defined budget for typically two to four weeks until the final hearing, and a final cash collateral order entered after a noticed hearing 14-28 days post-petition authorizing use through plan confirmation. The interim order grants the secured party adequate protection (cash payments equal to interest accrual at the contract rate, replacement liens on post-petition assets, and a Section 507(b) superpriority administrative claim if the adequate protection later proves insufficient) and includes a budget covenant (variance limits typically 10-15% on disbursements line by line and aggregate, with carve-outs for permitted variations). Variance covenants are policed strictly: a meaningful breach can give the secured party stay-relief rights, default rights on the cash collateral, and acceleration of milestones in the case.

A debtor with adequate cash collateral and operating cash flow may run the case on cash collateral alone, avoiding the cost and structural commitments of a DIP facility. Debtors with insufficient cash flow typically combine cash collateral usage with DIP financing under Section 364, with the DIP providing supplemental liquidity above what cash collateral alone can support.

Utilities (Section 366 adequate assurance)

Section 366 of the Bankruptcy Code gives utility providers (electricity, gas, water, telecommunications) the right to terminate service 30 days after the petition unless the debtor provides "adequate assurance of payment." The first-day motion typically establishes a procedure for adequate-assurance deposits, fixing the deposit amount at a percentage of typical monthly billing (often 50-100%) and authorizing the debtor to make those deposits without further court order.

Critical vendors

Authorization to pay specific pre-petition trade creditors whose continued cooperation is essential to the business. The "critical vendor" doctrine rests on the "doctrine of necessity" and Section 105(a) of the Bankruptcy Code, but its scope was sharply narrowed by the Seventh Circuit's 2004 Kmart ruling (In re Kmart Corp.). Kmart had received bankruptcy court approval to pay roughly $300 million of pre-petition claims to approximately 2,300 critical vendors; the Seventh Circuit reversed, holding that the bankruptcy court could not approve the motion under the necessity-of-payment doctrine and that any debtor seeking critical-vendor authority must satisfy heightened procedural and evidentiary standards. The post-Kmart standard requires the debtor to prove that the specific vendor would not continue doing business with the debtor on any basis without payment of pre-petition claims. The motion typically establishes a maximum dollar amount (often $5-50 million depending on case size), specific qualifying criteria, and monitoring requirements. The U.S. Trustee and UCC scrutinize critical-vendor motions closely.

Customer programs

Authorization to honor pre-petition customer obligations (warranty, gift cards, loyalty programs, deposits, refunds). Without this relief, customer-facing operations could grind to a halt as customers refuse to engage with a company that might dishonor their commitments. The motion is often non-controversial but operationally critical, particularly for retail and consumer-facing businesses.

Taxes

Authorization to pay pre-petition sales taxes, payroll taxes, property taxes, and other taxes due to government authorities. Some taxes are technically priority claims under Section 507; others are not but practically must be paid to avoid government enforcement actions that could disrupt operations.

Insurance

Authorization to continue existing insurance programs, pay premiums, and continue D&O insurance for officers and directors. Insurance disruption is a major operational risk, and the motion is typically among the least controversial.

NOL trading restrictions (Section 382 motion)

Authorization to impose trading restrictions on the debtor's equity to preserve net operating loss (NOL) carryforwards and other tax attributes. Section 382 of the Internal Revenue Code limits NOL utilization after an "ownership change" (defined as a more than 50 percentage point cumulative shift in ownership by 5%-or-greater shareholders over a three-year window). Pre-petition trading in the debtor's equity can trigger an ownership change that severely limits or eliminates the value of NOLs going forward. The first-day NOL motion typically (1) requires advance notice from holders of more than a threshold (often 4.5% to 4.75%) of the debtor's stock before any trade that would change their position, (2) authorizes the debtor to seek injunctive relief to block trades that would trigger an ownership change, and (3) preserves the option to take advantage of the Section 382(l)(5) bankruptcy exception (which can preserve full NOL utilization in plans where qualified creditors and historic shareholders together hold at least 50% of post-emergence stock). NOL preservation can be worth hundreds of millions of dollars in tax attributes for a debtor with substantial historic losses.

KEIP and KERP motions

Authorization for management compensation programs to retain and incentivize key employees through the case. Key Employee Incentive Plans (KEIPs) are performance-based bonus programs for "insiders" (officers and directors who can influence the debtor) and must satisfy the Section 503(c)(1) standard, which generally requires demonstrating that the program is properly designed to incentivize performance rather than to retain insiders against their will. Key Employee Retention Plans (KERPs) are pure retention programs for non-insider employees and require only the lower business-judgment standard under Section 503(c)(3). The 2005 BAPCPA amendments dramatically restricted insider retention bonuses; modern KEIP/KERP motions are carefully structured to comply with the post-BAPCPA standards, with KEIP performance metrics tied to specific operational or transaction milestones rather than mere continued employment. Total program costs typically run 0.5-2.0% of enterprise value, with sizing scrutinized closely by the U.S. Trustee and UCC.

Joint administration

Procedural relief combining the cases of multiple affiliated debtors for case-management efficiency. Most large corporate Chapter 11 cases involve dozens or hundreds of affiliated debtor entities filing simultaneously (First Brands had 98); joint administration consolidates the procedural docket without substantively consolidating the estates.

Professional retention

Authorization for the debtor to retain its bankruptcy counsel, RX bank, FA, and other professionals. The motion specifies the proposed engagement terms (monthly retainer, success fee, hourly rates), the conflict-check procedures, and the proposed compensation framework. The U.S. Trustee scrutinizes professional retention closely and often negotiates fee modifications.

Interim DIP financing

The most consequential first-day motion. The motion seeks interim approval of the DIP facility, releases an initial draw (typically $200-500 million for a multi-billion-dollar facility) sufficient to fund operations through the second-day hearing, and grants the priming liens and superpriority claims that the DIP requires. Interim DIP approval is the single most important first-day relief: without it, the company has no source of post-petition funding and would convert to Chapter 7. First Brands secured $500 million of its $1.1 billion DIP at the October 1, 2025 first-day hearing; Benson Hill (filed March 20, 2025 in Delaware) secured an $11 million lifeline through its first-day approvals; CURO opened its case (March 2024) with a $70 million new-money DIP. The interim release size relative to total DIP commitment is one of the negotiated points between the debtor and the DIP lender, with the lender preferring smaller interim draws (more leverage at the second-day hearing) and the debtor preferring larger draws (more operational runway).

The first-day declaration is the foundational sworn testimony of the case. Typically signed by the CRO (or, in less complex cases, by the CFO or another senior officer), the declaration provides the bankruptcy court with the company's history, the events leading to the bankruptcy filing, the proposed first-day relief, and the legal and factual basis for each motion. The declaration is filed with the petition and serves both as substantive support for first-day motions and as the primary public document explaining the case to the press, analysts, and creditors who learn about the filing through the docket.

A typical first-day declaration runs 30-100 pages and addresses the following components:

The declaration is publicly filed and becomes the most-quoted document in early case coverage. Sophisticated CROs draft the declaration with both legal and reputational considerations in mind, with key statements stress-tested against potential cross-examination by objecting creditors at the first-day hearing.

The first-day hearing is a high-intensity procedural event. The bankruptcy judge sits with the debtor's lead counsel making the case for each motion, the CRO or CFO testifying on operational necessity, the proposed DIP lender's counsel arguing for DIP approval, and any objecting parties presenting their positions. The hearing typically runs 2-6 hours for a complex case but can extend to multiple days for the most contested situations.

The U.S. Trustee is a Department of Justice official who acts as an independent watchdog in every Chapter 11 case. The U.S. Trustee receives notice of every first-day motion, scrutinizes the proposed relief, and frequently negotiates modifications before filing formal objections. The most common areas of U.S. Trustee scrutiny:

The U.S. Trustee also drives appointment of the official unsecured creditors committee under Section 1102, typically within 7-21 days of the petition. The UCC's selection (usually 5-9 of the largest unsecured creditors willing to serve) shapes the post-petition negotiation dynamic in ways the debtor cannot control. Sophisticated debtors and their RX banks accordingly pre-engage with likely UCC members during the pre-filing phase, both to anticipate the UCC's positions and to ensure that the largest unsecured creditors are not surprised by the filing or its terms.

The proposed first-day orders are typically drafted by the debtor's counsel and circulated to key parties before the hearing. The most contested first-day issues are typically the DIP terms (size, pricing, milestones, roll-up amount, priming liens) and the critical-vendor authority (scope, dollar limits, monitoring). Other motions (wages, cash management, utilities, customer programs, taxes, insurance) are usually approved on an interim basis with minor modifications negotiated before the hearing.

From interim to final orders

After the first-day hearing, the court enters interim orders on each motion. The interim orders are immediately effective, allowing the company to continue operating under the new framework. Final orders on each motion are entered at the second-day hearing, which typically occurs 30-45 days after the petition date (after the U.S. Trustee has appointed the UCC and creditors have had time to scrutinize the proposed relief). Most interim orders carry through to the final orders without material change, but contested first-day issues (especially DIP terms) often produce significant negotiation between interim and final approval.

The first-day machinery is the operational hinge between the pre-petition phase (months of negotiation and preparation) and the post-petition phase (the operating period under court supervision). Getting the first-day motion package right is one of the highest-stakes deliverables in any Chapter 11 engagement, with the outcome determining whether the business operates seamlessly through the most vulnerable period of the case or stumbles into operational chaos that erodes value before the plan negotiations have even begun.