Draft Disclosure Statement

Skill: Draft Chapter 11 Disclosure Statement

1. Subject-matter triage (only if applicable)

• Treat the disclosure statement as a standalone court-facing document that must be complete enough for voting and confirmation support under § 1125.
• Identify the plan, schedules, projections, valuation, claims data, and case documents that control the narrative before drafting.
• If the source set contains inconsistent financial figures, choose one operative figure set, state the basis for selection, and use it consistently throughout the document.
• If more than one class, constituency, period, scenario, or valuation input is implicated, enumerate them first and then carry the analysis through class by class or scenario by scenario.
• If the plan contemplates impaired classes, rejected classes, insider treatment, avoidance exposure, or cramdown, those topics must be addressed affirmatively rather than implied.

2. Failure modes the skill is correcting

• The draft summarizes the plan but omits the information a reasonable creditor would need to cast an informed vote.
• The draft states a liquidation conclusion without a disciplined class-by-class comparison tied to the plan economics.
• The draft fails to explain how impaired or dissenting classes are treated, leaving the confirmation path unclear.
• The draft leaves conflicting debt, recovery, enterprise value, or projection figures unresolved, creating internal inconsistency.
• The draft ignores insider transfers, disputed claims, avoidance litigation, tax effects, or implementation risks even though those issues affect voting and confirmation.
• The draft uses conclusory legal statements without naming the Bankruptcy Code provision, rule, or other authority supporting the proposition.
• The draft describes issues in prose but does not tie them to the affected classes, documents, or downstream consequences.

3. Legal frameworks / domain conventions that apply

• Adequate information under 11 U.S.C. § 1125 is the governing disclosure standard; the statement should be written for an informed creditor, not a lay summary.
• Best-interests analysis under 11 U.S.C. § 1129(a)(7) requires a realistic liquidation comparison for each impaired class receiving plan treatment.
• Confirmation analysis for dissenting classes should track the applicable cramdown framework under 11 U.S.C. § 1129(b), including fair and equitable treatment and no unfair discrimination where relevant.
• Classification, impairment, voting, and acceptance mechanics should reflect the plan’s actual treatment of each class under 11 U.S.C. §§ 1122, 1123, 1124, 1126, and 1129.
• Tax disclosure should address the material federal income tax consequences of the restructuring, using the provisions and exclusions that apply to the transaction structure disclosed in the source materials.
• Insider transaction disclosure should identify prepetition transfers or other related-party dealings that a reasonable creditor would consider material to voting or confirmation.
• Avoidance actions, disputed claims, and pending litigation should be described with their potential distributional effect, not merely listed.
• Valuation discussion should explain the assumptions and methodology that support the plan’s recovery picture and liquidation comparison.
• Any legal conclusion stated in the disclosure should be anchored to a named authority, not presented as a bare conclusion.

4. Analytical scaffolds

• Start with a concise introduction that explains the purpose of the disclosure statement, the plan structure, and the information a creditor should take from the document.
• Provide a case background section covering the debtor’s business, filing posture, capital structure, and the path to the proposed reorganization.
• Summarize the plan by class, including treatment, impairment status, voting expectations, new value or exit financing if applicable, and the effect of releases, injunctions, or discharge provisions.
• Build the liquidation analysis as a class-by-class comparison between plan treatment and liquidation recovery, using the source documents’ assumptions and resolving any conflicts in figures.
• If the plan depends on a value conclusion, set out the valuation methodology, the operative valuation conclusion, and the link between valuation and recoveries.
• Address any class expected to reject or be deemed to reject, and explain the legal confirmation route that the plan is expected to use.
• Separate risk factors into distinct, concrete topics such as confirmation risk, valuation risk, financing risk, claims allowance risk, litigation risk, and implementation risk.
• Include a dedicated tax consequences discussion that covers debt discharge, basis, attributes, and any ownership-change or limitation issue that is material under the disclosed structure.
• Include a dedicated insider transactions section for related-party payments, transfers, or guarantees, with the recipient, timing, and business rationale if disclosed.
• Include a claims and litigation section for disputed, contingent, or unliquidated claims, avoidance actions, and the likely timing and effect of resolution.
• End with alternatives to the plan, including liquidation and any feasible restructuring alternative, so the plan is framed against realistic options.

5. Vertical / structural / temporal relationships (only if applicable)

• Track how the debtor’s prepetition structure maps into the plan structure: what survives, what is extinguished, what is reinstated, and what is newly issued.
• Make temporal sequencing explicit where it matters: filing, solicitation, confirmation, effective date, distributions, and post-effective-date administration.
• When a recovery depends on an upstream event, state the dependency chain plainly, such as valuation first, then class treatment, then voting, then confirmation mechanics, then distribution.
• Where source materials include multiple periods or forecast horizons, keep historical results separate from projections and do not blend them in a single narrative sentence.
• If the plan contains different treatment for similarly situated claims based on timing, collateral, priority, or election rights, describe the distinction in the order it affects recovery.

6. Output structure conventions

• Draft a comprehensive disclosure statement in conventional numbered sections with a court-ready tone.
• Use section headings that naturally cover: introduction, case background, plan summary, classification and treatment, valuation, liquidation/best-interests analysis, confirmation considerations, tax consequences, insider transactions, risk factors, claims and litigation, voting procedures, and alternatives.
• Present the plan summary and liquidation analysis in tables where class-by-class comparison will improve clarity.
• If source figures conflict, state the adopted figure in the relevant section and keep that figure consistent throughout the document.
• For every material legal proposition, name the governing authority in the text or cite it in the form customarily used in the source materials.
• Do not leave any impaired class, dissenting class, material insider transfer, tax issue, or pending litigation unaddressed if it bears on voting or confirmation.
• The finished artifact must be the operative disclosure statement, not a memo about how one would draft it.