First-Day Motion
A First-Day Motion is a Chapter 11 motion filed at or shortly after the bankruptcy petition seeking expedited court authority for operational, financing or administrative relief needed at the beginning of the case.
How it works
“First-day motion” is bankruptcy-practice shorthand rather than one statutory motion type. Requests can include continued cash management, payroll, utilities, Cash Collateral, financing and selected supplier relief.
First-day relief is about timing
The common feature is urgency near the beginning of Chapter 11. Different motions can rely on different Code sections, Rules and local procedures.
Common requests preserve operating continuity
Court guidance identifies requests involving bank accounts, cash management, utilities, customer obligations, payroll, critical suppliers and Cash Collateral.
Emergency timing does not eliminate evidence
First-day orders can affect creditor leverage and priority. The U.S. Trustee reviews early emergency orders and whether requested relief is appropriately tailored.
Interim and final relief can differ
Some matters receive interim treatment followed by a final hearing after broader notice. The first order may not represent the permanent case structure.
Worked example: liquidity bridge at filing
A debtor with three days of payroll cash seeks authority to use $6 million of Cash Collateral under an interim budget. The order can preserve operations while reserving broader disputes for a later hearing.
Common mistakes
Treating first-day as independent statutory authority; assuming every request is granted; and reading only the motion instead of the order entered by the court.
Why it matters in restructuring analysis
First-Day Motions can reveal the debtor’s immediate vulnerabilities faster than a lengthy disclosure document. Payroll relief can show labor intensity, utilities relief can expose operational dependence, Cash Collateral papers can reveal liquidity constraints, and financing motions can disclose lender leverage. The most important document is the entered order because negotiations can materially change the requested relief. Investors should compare the motion, objections and final order rather than treating the opening request as the case’s settled economics.
Example
A company files Chapter 11 on Sunday and needs to fund payroll, preserve bank accounts and use Cash Collateral on Monday. It files separate First-Day Motions supported by evidence explaining why interruption would damage the estate.
Example
A company files Chapter 11 on Sunday and needs to fund payroll, preserve bank accounts and use Cash Collateral on Monday. It files separate First-Day Motions supported by evidence explaining why interruption would damage the estate.
Professional note
The key question is not whether relief is called first-day. It is what legal authority supports it, which creditor rights are affected and whether the entered order creates lasting economics.
Related terms
- Debtor-in-Possession (DIP) Financing
Debtor-in-Possession, or DIP, Financing is credit obtained after a bankruptcy filing to fund a debtor's operations and restructuring while the debtor remains in possession of its business under Chapter 11.
- Adequate Protection
Adequate Protection is bankruptcy protection provided to preserve a creditor's interest in property when the automatic stay, use of collateral, sale of property or grant of a new lien could reduce the value of that protected interest.
- Debtor in Possession
A Debtor in Possession, or DIP, is a Chapter 11 debtor that remains in possession and control of its business and bankruptcy estate while exercising most rights, powers and duties of a Chapter 11 trustee, subject to the Bankruptcy Code and court oversight.
- Cash Collateral
Cash Collateral is cash, deposit accounts, securities, cash equivalents and specified proceeds or revenues in which the bankruptcy estate and another entity both have an interest, such as a secured lender’s lien on cash proceeds.
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