• Delaware Bankruptcy Court Weighs in on Creditor Groups' Disclosure and Possible Fiduciary Obligations
  • December 24, 2009 | Authors: Alan W. Kornberg; Stephen J. Shimshak
  • Law Firm: Paul, Weiss, Rifkind, Wharton & Garrison LLP - New York Office
  • Hedge funds and other investors in debt or equity securities often form unofficial “ad hoc” committees through which they actively participate in chapter 11 cases. Recent decisions affirm that such ad hoc committees must comply with the disclosure requirements of Bankruptcy Rule 2019 -- including the nature and amounts of claims or interests held by members and other details. What about a “group” that says it’s a lot less than an ad hoc committee and therefore, outside the Rule? In a recent decision, Judge Mary Walrath of the Delaware Bankruptcy Court ruled that the members of a noteholder “group” must comply with Rule 2019 and file a verified statement setting forth, among other information, (1) the names and addresses of the members of the group; and (2) the nature and amount of the claims or interests held, the time of their acquisition, the amounts paid for them, and any sales or other disposition of the claims or interests.