Debtor in Possession Bank Account: Setup, Reports, and Fees

A business that files Chapter 11 must open a debtor in possession bank account immediately after filing, and route every post-petition dollar through it. The account has to sit at a bank the U.S. Trustee has approved, be titled with the business name, the words “Debtor-In-Possession,” and the case number, and be reported on every month. Pre-petition accounts get closed. Checks carry the new titling. Miss any of this and the case can be dismissed, converted to Chapter 7, or taken away from current management.

Why the Account Exists

Chapter 11 usually lets the business keep operating. In exchange, the Bankruptcy Code hands the debtor almost all the duties of a bankruptcy trustee, including the duty to protect estate assets for creditors.¹ The DIP account is how that duty gets enforced day to day. All revenue after the filing date, whether from sales, receivables, or anything else, has to be deposited into it, and all operating expenses have to be paid from it.² One account, one paper trail, no mixing with the old accounts.

Where You Can Open the Account

Not every bank is eligible. The institution has to be on the U.S. Trustee’s list of authorized depositories for the region where the case was filed. Those banks have signed agreements committing to specific reporting and safeguarding requirements.³ Your bankruptcy attorney, or the local U.S. Trustee’s office, can hand you the current list.

Federal law also sets deposit-security rules. Under 11 U.S.C. § 345, estate funds have to be covered by federal deposit insurance or backed by additional security, such as a surety bond in favor of the United States or a pledge of government securities.⁴ Standard FDIC insurance is $250,000 per depositor, per insured bank.⁵ Anything the estate holds above that at a single bank needs a bond or qualifying collateral to cover the excess. A court can waive the requirement for cause, but the default is strict, so cases with real cash balances should plan for it up front.

Opening the Account

Documents the Bank Will Ask For

A filed copy of the bankruptcy petition showing the case number and filing date.
A court order authorizing the debtor to maintain new bank accounts and, where applicable, to use cash collateral.
A corporate resolution authorizing specific individuals to sign on the account.
EIN documentation. Corporate debtors use the existing EIN. Individual debtors filing Chapter 11 have to get a separate EIN for the bankruptcy estate from the IRS.⁶

Local rules may also require you to give the U.S. Trustee’s office a Debtor-in-Possession Statement of Depository and a voided check from the new account.

How the Account Has to Be Titled

Every DIP account has to be titled so the debtor’s status is obvious on its face. The name has to include the business name followed by “Debtor-In-Possession” and the bankruptcy case number, and that same information has to be imprinted on every check issued from the account.⁷ This is not cosmetic. Checks that leave off the DIP designation or case number can create compliance problems and draw scrutiny from the U.S. Trustee.

You May Need More Than One Account

Many U.S. Trustee regions require multiple DIP accounts. A common setup is a general operating account for day-to-day expenses, a separate tax account for payroll and other post-petition taxes, and a separate account for cash collateral whenever a secured creditor’s collateral generates cash proceeds.² The number of accounts and what each one covers depends on the region, so confirm the local requirement with your attorney before opening anything.

Closing the Old Accounts and Handling Cash Collateral

The debtor has to close every bank account that existed before the filing. That covers traditional checking and savings, plus online payment platforms and digital wallets that can hold customer deposits.² The U.S. Trustee guidelines tell debtors to act “immediately” after filing, so treat this as a first-day task.

Balances left in the pre-petition accounts may be cash collateral, which is where things get delicate. Cash collateral includes cash, bank deposits, and other cash-equivalent assets in which a secured creditor holds an interest. If a lender has a lien on your inventory and you sell that inventory, the cash proceeds are the lender’s collateral in a new form, and you cannot spend it without permission.

The Bankruptcy Code requires either the consent of every creditor with an interest in the cash collateral or a court order authorizing its use. Without one of those, the cash has to be kept segregated and accounted for separately.⁸ Courts routinely grant cash collateral orders early in the case, often on an emergency basis, because most businesses cannot go even a few days without access to those funds. Moving pre-petition balances into the new DIP account almost always requires that authorization first.

What You Can Spend From the Account

Having a working DIP account does not mean management can spend freely. Ordinary-course expenses, such as paying vendors, covering utilities, and running payroll, generally do not need separate court approval. Anything outside the ordinary course does. That includes executive compensation increases, large asset purchases, settlements of lawsuits, and hiring professionals like attorneys or accountants to work on the case.⁹

The line between ordinary and extraordinary is not always crisp. When in doubt, get court approval first. A motion to approve an expenditure is cheaper than defending against a claim that you misused estate funds.

Monthly Operating Reports

A debtor in possession has to file periodic reports on the estate’s financial activity, the same way a trustee would.¹⁰ In practice that means monthly operating reports filed with both the bankruptcy court and the U.S. Trustee, a schedule reinforced by the Federal Rules of Bankruptcy Procedure.¹¹

Each report generally includes:

Complete bank statements from every DIP account open during the period, with account numbers redacted to the last four digits.
Bank reconciliations showing the books match the bank’s records.
A check register logging every check issued from each account.
A statement of receipts and disbursements summarizing money in and money out for the month.

Reports are typically due by the 21st of the month following the period they cover, though local rules can set different deadlines. Falling behind is one of the quickest ways to draw a motion to dismiss or convert, so treat the deadline as fixed.

U.S. Trustee Quarterly Fees

Every Chapter 11 debtor also owes quarterly fees to the U.S. Trustee Program based on total disbursements from the DIP accounts each calendar quarter. For calendar quarters beginning April 1, 2026, the fee schedule (updated by the Bankruptcy Administration Improvement Act of 2025) is:¹²

$0 to $62,624 in disbursements: $250 flat fee.
$62,625 to $999,999: 0.4% of quarterly disbursements.
$1,000,000 to $27,777,722: 0.9% of quarterly disbursements.
$27,777,723 or more: $250,000 cap.

Payments are due no later than one month after each calendar quarter ends: April 30, July 31, October 31, and January 31. As of September 2025, all payments have to be made electronically through the U.S. Trustee Program’s Pay.gov portal. Not paying is specifically listed as cause for dismissal or conversion under 11 U.S.C. § 1112(b)(4)(K).¹³

What Happens If You Get It Wrong

The most common response to DIP account failures is a motion to dismiss the Chapter 11 case or convert it to Chapter 7 liquidation. Several of the statutory grounds for “cause” under Section 1112 map straight onto account problems:¹³

Gross mismanagement of the estate.
Unauthorized use of cash collateral that substantially harms one or more creditors.
Failure to comply with a court order, including orders governing DIP accounts.
Failure to satisfy filing or reporting requirements.
Failure to pay post-filing taxes.
Failure to pay required fees under the U.S. Trustee Program.

If the misuse of funds rises to fraud, dishonesty, or gross incompetence, the court can appoint a Chapter 11 trustee and displace existing management altogether. Commingling funds or spending cash collateral without authorization can also lead to civil contempt, denial of plan confirmation, or, in extreme cases, referral for criminal prosecution.

Closing the Account After Confirmation

Once the court confirms the Chapter 11 plan, the DIP accounts have done their job. The debtor closes them and sets up ordinary business accounts, presenting a copy of the confirmation order to the bank.¹⁴ The U.S. Trustee stops monitoring at that point, though obligations under the confirmed plan continue. If the case is dismissed or converted to Chapter 7 rather than confirmed, the same closure process applies, with a Chapter 7 trustee taking over in a conversion.

One quarterly fee payment usually remains due after confirmation, covering the quarter in which the case closes. Missing that last payment is a common mistake and can result in the case being reopened. Get the final operating report and fee payment in before you move on.

1
Office of the Law Revision Counsel. 11 U.S. Code 1107 – Rights, Powers, and Duties of Debtor in Possession
2
Justice.gov. Region 17 Chapter 11 Operating and Reporting Guidelines for Debtors in Possession
3
U.S. Trustee Program. USTP Authorized Depository Institutions List
4
Office of the Law Revision Counsel. 11 USC 345 – Money of Estates
5
FDIC. Deposit Insurance At A Glance
6
Internal Revenue Service. Bankruptcy Tax Guide – Publication 908
7
Justice.gov. Region 13 Little Rock Chapter 11 Guidelines for Debtors-In-Possession
8
Office of the Law Revision Counsel. 11 USC 363 – Use, Sale, or Lease of Property
9
United States Courts. Chapter 11 – Bankruptcy Basics
10
Office of the Law Revision Counsel. 11 USC 704 – Duties of Trustee
11
Cornell Law School. Federal Rules of Bankruptcy Procedure Rule 2015 – Duty to Keep Records, Make Reports, and Give Notices
12
U.S. Department of Justice. Chapter 11 Quarterly Fees
13
Office of the Law Revision Counsel. 11 U.S. Code 1112 – Conversion or Dismissal
14
U.S. Department of Justice. Guidelines for Chapter 11 Cases