Summary:
The Debtors own and operate a feed mill. Following initiation of foreclosure proceedings against 442.92 acres of land (which had been in the Debtors’ family for centuries!), the Debtors filed Chapter 11. Multiple parties objected to the Plan and Disclosure Statement on the basis that the Disclosure Statement provides insufficient information for creditors to determine the source of income to fund the Debtor’s Plan and determine if the Plan is feasible.
The Disclosure Statement provided that the Debtors will “make payments under the Plan from income earned through continued operations”, but does not provide “adequate information”, as defined by 11 U.S.C. § 1125(a)(1), as to the Debtors’ “continued operations.” Such “adequate information” must provide the creditors with an accurate basis for determining their position and their ability to make an informed decision with regard to the acceptance or rejection of the plan.
Here, the Court found that the Disclosure Statement must include at the very minimum projections of the Debtors’ income and expenses as well as a history of the Debtors’ involvement with the companies owned by the Debtors that would be funding the plan. As such information was absent, confirmation of the plan was denied.
For a copy of the opinion, please see:
Newkirk- Adequate Information Necessary for Confirmation of Chapter 11 Plan.pdf
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