Page 44 - Bankruptcy Volume 1

Personal property of the debtor is detailed throughout the remainder of the schedule and consists of 74
separate questions that should be answered to the extent applicable for that debtor entity. The questions
include a broad range of topics, including bank account information, insurance information, patent and
trademark data, and company equipment and fixtures. Part 11, questions 70–79, "All other assets," is a
catch-all question that can be used to itemize personal property not covered in the previous questions.
The main data source for Schedule A/B is the company’s balance sheet and supporting schedules; how-
ever, other data sources can and will be utilized as the question and nature of the company records re-
quire. For example, most "off balance sheet" assets, including contingent assets, will not be listed on a
company balance sheet but may be responsive to questions on Schedule A/B. Insurance policies, patents,
and legal claims where the company is the plaintiff are examples. As mentioned, it should be empha-
sized that, to the extent the valuation methodologies differ from those required by the forms, conspicu-
ous notes to the reader should be provided.

Liability Schedules

Schedules D, E/F call for the listing of actual and potential liabilities of the debtor. One way to think of
this is that all obligations start on Schedule E/F (general unsecured claims) and then are moved to
Schedule D, to the extent those claims are secured. Both Schedules D and E/F allow the preparer to dif-
ferentiate between portions of a claim that may be secured or entitled to priority and the remainder of the
claim, which may be a general unsecured claim. Liabilities should be marked as contingent (C), unliqui-
dated (U), or disputed (D), or a combination of each, where applicable. A contingent liability is one that
is dependent on the occurrence of a future event. For example, the return of a subtenant security deposit
is contingent upon the subtenant fulfilling its obligations as a lessee in order to claim the full amount of
the deposit as due and owing. An unliquidated liability is one in which it is agreed a liability is owed,
but circumstances (either by virtue of the nature of the claim or by the state of company records) prevent
a final amount from being determined. Disputed liabilities are instances in which the existence or the
amount of a liability is in question. Care should be taken to properly flag liabilities as C, U, D, or a
combination of C, U, or D, as these flags added to a particular liability will require a creditor to file a
proof of claim to solidify a claim against the respective debtor. The absence of C, a U or D flag indicates
prima facie validity of the liability listed, and the filing of a proof of claim by the creditor will not be
necessary as long as the creditor agrees with the scheduled amount and priority.

Schedule D

Schedule D provides a listing of potential secured claims against the debtor. For reference, Section 506
of the Bankruptcy Code defines secured claims. All claims in which a creditor asserts a security interest
should be listed, as the schedules provide an opportunity to contest the validity of the interest with a C,
U or D flag. Examples of secured debt to be listed on Schedule D include secured loans, letters of credit,
UCC filings, mortgages, and mechanics’ and judgment liens. The same secured liability can span multi-
ple debtors and the manner in which the liability is properly represented will involve strategic decisions,
such as including C, U and D flags and alternatives as to how the total liability dollar amount is incorpo-
rated. One option is to list the full liability dollar amount on the primary debtor only with "undeter-
mined" amounts on co-obligor or guarantor debtors. Another option is to list the full liability dollar
amount on all applicable debtors. Additionally, the secured liability can be listed as "principal only" or
can include principal plus interest amounts. Counsel should be included in these types of tactical deci-
sions as they can greatly affect the total liabilities listed for a particular debtor.

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