How to report a one-time license receipt on monthly operating report Form 11-MOR

The short answer for interim CFOs

Report a one-time license payment on Form 11-MOR in the month the money clears into the debtor-in-possession account, not the month the license was signed or invoiced. Then make two decisions with debtor's counsel and your accountants: whether the receipt also belongs in the assets sold or transferred section, and which income statement line carries it. A footnote that cites the court order and docket number keeps the US Trustee's analyst and the creditors' committee from having to ask.

Part numbers below follow the form as we last reviewed it; check them against the current version. Form 11-MOR is the US Trustee Program's uniform monthly operating report for chapter 11 debtors. It is cash-focused by design: the analyst wants to see receipts, disbursements and a reason for anything unusual. A license payment for operating records is unusual, so the reporting job is mostly about consistency and a clear explanation.

What you need before you report it

• The court order. Licensing operating records is outside the ordinary course for most operating companies, so expect a motion and an order. Note the docket number and any conditions on how proceeds are used.
• The executed agreement and invoice. Confirm the amount payable to the estate and when. SourceX agrees one all-in price with the company, its own fee included and no separate charges, and payment typically arrives within about 60 days of invoicing once the buyer selects the data.
• The account and cash collateral terms. Check whether the cash collateral or DIP order sends proceeds to a segregated account or to the lender; the page on whether license proceeds are cash collateral walks through the question.
• Your accountants' view on revenue recognition. Under ASC 606 a license can be a right to use intellectual property as it exists when granted or a right to access it over the license period, and the difference affects timing; Deloitte's revenue recognition roadmap on the nature of a license explains the distinction. Ask your auditors how it applies to this agreement.
• The current form and instructions from the US Trustee Program's website. The analyst checks your report against the version in force, and the program revises it from time to time.

How to report the receipt, step by step

1. Pick the month. Report the receipt in the month the funds clear into the debtor-in-possession account. If the buyer has selected the data but not yet paid, nothing goes in the cash sections; mention the pending receipt in the notes if the committee is tracking it.
2. Enter it as a cash receipt. Include the payment in total receipts in the cash receipts and disbursements section (Part 1 on the current form), and make sure ending cash ties to the bank statements you attach.
3. Settle the characterization with counsel. If counsel treats the license as a transfer of estate property outside the ordinary course, complete the assets sold or transferred section (Part 3) with the cash price, any payments to third parties incident to the transaction and the net proceeds. If counsel treats it as ordinary-course revenue, leave that section blank and say why in the footnote.
4. Book it in the income statement. Record it on the line your accountants choose (Part 4), and keep that choice for any later installment or related receipt. Do not net costs against it; show data-preparation or redaction costs as expenses or as payments incident to the transaction.
5. Report what happens to the money. If the order sends proceeds to a secured lender or into escrow, those payments are disbursements in the month they are made. Disbursements feed the line used for the quarterly fee calculation, so confirm the effect with counsel before the payment goes out.
6. Check the questionnaire. Answer the questions about payments outside the ordinary course and court approvals so they match the docket; any vendor paid to prepare or redact the data should have been authorized.
7. Write the footnote using the template below, and attach the bank statement that shows the receipt.
8. Tell the analyst and the committee first. A short email before filing usually saves a follow-up letter.

A footnote template:

Where a license receipt shows up on the form

Common mistakes

Example (Illustrative)

This scenario is fictional. Larkspur Ridge Freight, an invented chapter 11 debtor with about 180 full-time employees at peak, wound down its brokerage desk but kept eight years of TMS, ticketing and email history. Debtor's counsel filed a motion to license the records, and the court approved it in March. The buyer selected the data in April, the invoice went out, and the payment cleared in May.

The interim CFO left the March and April reports unchanged apart from a note on the pending license. The May report showed the receipt in Part 1, the transaction in Part 3 because counsel treated it as outside the ordinary course, and the income on the other-income line the debtor's accountants chose. Under the cash collateral order, part of the proceeds went to the term lender in June, and the June report showed that payment as a disbursement. Every report carried the same footnote wording.

Before you introduce a debtor to SourceX

Interim CFOs and client accounting services teams supporting debtors meet the records question early, often while setting up the first operating reports and the initial debtor interview file. A US debtor that had 50+ full-time employees at peak (contractors excluded) and kept several years of operating history across many systems may be able to add recovery for creditors through a license. The who qualifies page has the full baseline, and the company fit checker gives a preliminary, non-binding read.

Two cautions. Preserve access first: if subscriptions are headed for rejection, export before the rejection takes effect, as covered in rejecting software subscriptions in chapter 11. And clear your own position: a CFO retained by the debtor who takes a personal reward on an estate transaction raises disclosure and conflict questions, so raise it with debtor's counsel and the US Trustee before you register, and expect that the answer may be no.

Partners earn 25% of the eligible platform fees SourceX actually collects from the referred company's licensing deals, capped at $100,000 per referred company, and only after the buyer pays and SourceX receives its fee; no reward is guaranteed. The reward never reduces what the estate receives. The fractional CFO partner page covers the role outside bankruptcy.

This is general information, not legal, tax or financial advice. Confirm reporting treatment with debtor's counsel, your accountants and the US Trustee's office before filing.

Next step

If a debtor you support holds years of operating records, register as a partner and introduce the debtor's counsel or CRO, or have the debtor apply directly at sourcex.si/apply.