This post is part of a series of posts entitled First Considerations for the Financially Distressed Business. For a comprehensive list of articles contained in this series, click here. In conjunction with filing a proposed plan, a chapter 11 debtor must also include a disclosure statement. This is an important document in a chapter 11 bankruptcy case as a disclosure statement is meant to disclose any and all important background information and each creditor’s treatment under the plan. Given that it is often easier to digest than the proposed plan, creditors rely heavily on this document to make an informed decision about the feasibility of the proposed plan. The requirement to file both a disclosure statement and a plan can be costly to a debtor, however, as creditors may object to both documents, leading to increased litigation.
