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West Palm Beach Bankruptcy & Business Attorneys > > Chapter 11 Bankruptcy > Understanding the Disclosure Statement in Chapter 11 Bankruptcy

Understanding the Disclosure Statement in Chapter 11 Bankruptcy


Chapter 11 bankruptcy is the court process that allows businesses in financial trouble to reorganize their debts in order to survive and continue business operations. Within this type of bankruptcy are many steps. One of the steps involves preparing a disclosure statement. Today’s article will help you better understand the disclosure statement and why it’s necessary for businesses who are seeking reorganization within a Chapter 11 bankruptcy.

What is the Disclosure Statement?

The disclosure statement provides information concerning the business’s financial affairs to help creditors make an informed decision on whether to accept or deny a business’s plan for reorganization.  It will explain how each creditor or class of creditors will be treated within the Plan of reorganization.  The disclosure statement is filed along with the plan of reorganization, according to Section 1121 of the U.S. Code.

Transparency Matters: Information to Include in the Disclosure Statement

In drafting the disclosure statement, you want to be transparent with the creditors about the financial health of your business.

The disclosure statement must contain what the U.S. Code defines as adequate information. Adequate information simply means materials or data that is detailed.

Some of the information to include within the disclosure statement includes the following:

  • Description of the Debts. This includes the current debt that the business has including expenses, accounts receivables, accounts payables, statements, liabilities, assets, and any other financial information that will reveal details about the business’s financial status.
  • Issues that Resulted in the Bankruptcy Filing.  The court wants to see the necessary reasons why the business is in this financial condition and what led to the filing of Chapter 11 bankruptcy.
  • Summary of What the Business Plans to Do Moving Forward. In the event the plan of reorganization is approved, the court wants to know how the business will handle the restructuring going forward so it can avoid making the same mistakes.

Additional information that should be listed in the Chapter 11 disclosure statement includes claims against the business, history of the debtor or business, and an explanation of tax consequences. It is important to note that small businesses who do not have enough relevant and adequate information, the court can deem a disclosure statement unnecessary.

Let an Experienced Chapter 11 Bankruptcy Attorney Help You Draft Your Disclosure Statement

When you let an experienced bankruptcy attorney help you properly draft the disclosure statement, your business has a greater chance of getting its plan of reorganization accepted and thus your Chapter 11 sucessful. Without an attorney by your side, you run the risk of not being able to stay in business and survive.

When You Need Help Drafting the Disclosure Statement for Chapter 11 Bankruptcy, Contact Our West Palm Beach Chapter 11 Bankruptcy Attorneys

If you need help on how to draft the disclosure statement for your Chapter 11 bankruptcy contact the West Palm Beach Chapter 11 bankruptcy attorneys at Kelley Kaplan & Eller for a consultation at 561-264-6850. We will help you draft the disclosure statement the right way, the first time. Call us now to get the help you need so you and your business can get back on your feet and get rid of your debts.




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