The First 24 Hours of a Chapter 11 Case Are Critical

When a business files Chapter 11 bankruptcy, the automatic stay immediately halts all creditor actions — but it also creates a new set of challenges. The Bankruptcy Code generally prohibits a debtor from paying any pre-petition debts, which means the business technically cannot pay employees for work already performed, cannot pay vendors for goods already delivered, and cannot continue many of the ordinary business transactions that keep the doors open.

This is where first day motions come in. These emergency motions are filed simultaneously with (or within hours of) the bankruptcy petition, and the court typically hears them within 1-3 days. Their purpose is to obtain court authorization for the debtor to take actions that are essential to maintaining business operations and preventing irreparable harm during the transition into bankruptcy.

Well-prepared first day motions can mean the difference between a successful reorganization and a chaotic collapse. At the Siddons Law Firm, we prepare comprehensive first day packages tailored to each business client’s specific operational needs.

Essential First Day Motions Explained

Motion to Pay Pre-Petition Employee Wages and Benefits

This is typically the most urgent first day motion. Employees who don’t get paid will leave — and without employees, the business cannot operate. This motion requests authorization to pay all accrued but unpaid wages, salaries, commissions, and benefits (health insurance, retirement contributions, reimbursable expenses) that were earned before the filing date.

The court almost always grants this motion because the Bankruptcy Code gives employee wage claims priority status (up to $15,150 per employee as of 2025 under 11 U.S.C. § 507(a)(4)), meaning these amounts would be paid ahead of general unsecured creditors in any distribution. Paying them promptly simply preserves the workforce the business needs to reorganize.

Motion to Use Cash Collateral

If the business has a secured lender (bank line of credit, equipment financing, etc.), the cash in its bank accounts likely constitutes “cash collateral” — meaning the lender has a security interest in it. Under 11 U.S.C. § 363, the debtor cannot use cash collateral without either the lender’s consent or court authorization.

This motion is critical because without access to its own cash, the business cannot pay rent, utilities, employees, or any other operating expense. The court will authorize use of cash collateral if the debtor provides “adequate protection” to the secured lender — typically through replacement liens, periodic payments, and regular reporting.

Motion to Maintain Bank Accounts and Continue Cash Management

Under normal bankruptcy rules, a debtor must close its existing bank accounts and open new ones at a federally insured depository. For a business with dozens of customer relationships, automatic payments, payroll systems, and merchant processing accounts, this would be operationally catastrophic.

This motion requests permission to continue using existing bank accounts, merchant processing relationships, and cash management systems. It also typically seeks a waiver of the requirement to immediately comply with certain U.S. Trustee operating guidelines, giving the business time to make an orderly transition.

Motion to Pay Critical Vendors

A “critical vendor” is a supplier whose goods or services are so essential to the business that losing access would threaten the entire reorganization. The classic example is a manufacturer with a sole-source supplier — if that supplier refuses to ship, production stops and the business fails.

This motion identifies critical vendors and requests authority to pay their pre-petition claims to incentivize continued supply on normal trade terms. Courts scrutinize these motions carefully, as they effectively allow certain unsecured creditors to be paid ahead of others. The debtor must demonstrate that each vendor is truly critical, that the vendor would refuse to supply on credit without payment, and that the business cannot obtain the goods or services elsewhere.

Motion to Pay Pre-Petition Taxes

Unpaid taxes (sales tax, withholding tax, property tax) can create serious problems in a Chapter 11 case. Tax authorities may have liens on business assets, and failure to stay current on trust fund taxes (amounts withheld from employees) can create personal liability for business owners. This motion authorizes payment of pre-petition taxes to prevent these complications and maintain good standing with taxing authorities.

Motion to Continue Insurance Programs

A lapse in insurance coverage can trigger defaults under commercial leases, loan agreements, and contracts, and exposes the business to uninsured risks during the most vulnerable period of the case. This motion authorizes continued payment of insurance premiums — including general liability, property, workers’ compensation, and D&O (directors and officers) insurance.

Motion for Interim Compensation Procedures

Professionals retained in the bankruptcy case (attorneys, accountants, financial advisors) must be approved by the court and are paid from the bankruptcy estate. This motion establishes procedures for professionals to receive interim monthly payments rather than waiting months for a formal fee application hearing — which helps ensure the debtor has access to qualified counsel throughout the case.

Motion to Extend Time to Assume or Reject Leases

Under 11 U.S.C. § 365(d)(4), a commercial debtor must assume or reject unexpired leases of nonresidential real property within 120 days of the petition date (extendable to 210 days with court approval). For businesses with multiple locations, this timeline may not be sufficient to evaluate each lease. A first day motion can begin the process of extending this deadline.

Motion for Joint Administration

When related entities file bankruptcy simultaneously (e.g., a parent company and its subsidiaries), this motion requests that the court administer the cases together for procedural efficiency — using a single docket, shared hearing dates, and consolidated notices. This reduces costs and simplifies the process for all parties.

First Day Motions in Subchapter V Cases

Subchapter V cases also involve first day motions, though the package is often more streamlined because the cases are smaller and less complex. Common Sub-V first day motions include authorization to use cash collateral, pay pre-petition wages, maintain bank accounts, and continue utility services. The Sub-V trustee typically works closely with the debtor’s counsel on these motions.

For a comprehensive guide to Subchapter V, see our Subchapter V Chapter 11 page.

The First Day Declaration

Accompanying the first day motions, the debtor typically files a detailed “first day declaration” — a sworn statement by a senior officer or principal of the business that explains the company’s history, operations, financial condition, the events leading to the bankruptcy filing, and the factual basis for each first day motion. This declaration gives the court the context it needs to rule on the emergency requests.

A well-crafted first day declaration tells a compelling story: here’s who we are, here’s what happened, here’s what we need to survive, and here’s our plan to come out the other side. It sets the tone for the entire case.

Frequently Asked Questions — First Day Motions

How quickly does the court hear first day motions?

Most bankruptcy courts schedule first day hearings within 1-3 business days of the petition date. In true emergencies, some courts will hear motions on the day of filing. The motions are typically heard on an interim (temporary) basis first, with a final hearing scheduled 2-3 weeks later to give creditors an opportunity to object.

Can creditors object to first day motions?

Yes. Creditors have the right to object to any first day motion. However, because these motions are heard on an expedited basis, creditors often have limited time to review and respond at the interim hearing. Objections are more commonly raised at the final hearing. In practice, most routine first day motions (employee wages, bank accounts, insurance) face little opposition. Critical vendor motions and cash collateral terms are more frequently contested.

What happens if first day motions are denied?

If a critical first day motion is denied, the consequences can be severe — employees may leave, vendors may refuse to supply, and business operations may grind to a halt. This is why thorough preparation is essential. An experienced bankruptcy attorney anticipates potential objections, provides sufficient evidence to support each motion, and proposes terms that balance the debtor’s needs with creditor protections.

Do I need first day motions if I file Chapter 7 or Chapter 13?

No. First day motions are specific to Chapter 11 (including Subchapter V). Chapter 7 involves liquidation (no ongoing operations to maintain), and Chapter 13 is for individuals with a different procedural framework. First day motions exist because Chapter 11 debtors continue operating their businesses and need immediate operational authority.

Related Resources

• Subchapter V Chapter 11 Bankruptcy for Small Businesses
• Chapter 7 vs Chapter 13: Which Is Right for You?
• Complete Guide to Filing Bankruptcy in PA
• Bankruptcy FAQ
• Section 341 Meeting of Creditors

This communication is from a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.