## Facts

- Metrocraft Publishing Services, Inc., a commercial printing company, filed a Chapter 11 petition.
- Metrocraft filed a proposed plan of reorganization and a disclosure statement seeking court approval under 11 U.S.C. § 1125 before soliciting creditor votes.
- The Official Creditors’ Committee objected, arguing the disclosure statement lacked “adequate information” required for creditors to make an informed judgment.
- After notice and a hearing, the bankruptcy court reviewed whether the disclosure statement contained sufficient, debtor-specific information for distribution to creditors.

## Issues

1. Whether the debtor’s Chapter 11 disclosure statement contained “adequate information” within the meaning of 11 U.S.C. § 1125(a)(1) to permit approval and use in soliciting plan acceptances under § 1125(b).

## Decision

- The court denied approval of the disclosure statement.
- The court found the statement contained multiple deficiencies and did not provide adequate information for creditors to evaluate the plan.
- The debtor was required to amend the disclosure statement to correct the identified shortcomings before approval would be considered.

## Legal Principles

- A disclosure statement must contain information “of a kind, and in sufficient detail,” as reasonably practicable, to enable a hypothetical reasonable creditor/investor in the relevant class to make an informed judgment about the plan. (11 U.S.C. § 1125(a)(1))
- Plan solicitation is prohibited unless creditors receive the plan (or a summary) and a court-approved disclosure statement containing adequate information. (11 U.S.C. § 1125(b))
- Adequacy is determined case by case; commonly referenced disclosure topics are a starting point, not a mandatory or exhaustive checklist.
- Boilerplate statements, legal quotations, or conclusory narratives are insufficient when creditors need concrete, debtor-specific facts.
- Depending on the case, adequate information may require meaningful disclosure about asset values, claims and liabilities, accounts receivable collectibility, potential avoidance actions (including preferences), pending or potential litigation, and insider or affiliate relationships.
- The court may approve a disclosure statement without requiring a formal valuation or appraisal, but the disclosure must still be sufficient for informed voting.

## Conclusion

The bankruptcy court refused to approve Metrocraft’s Chapter 11 disclosure statement because it lacked sufficiently specific, case-relevant financial and transactional information to allow creditors to make an informed decision on the plan, and it required amendment before distribution and solicitation could proceed.


In re Metrocraft Publ'g Servs., Inc., 39 B.R. 567 (Bankr. N.D. Ga. 1984)