bankruptcy procedure, rule 2019, disclosure requirements, hedge funds, institutional investors, chapter 11


This Note explores Federal Rule of Bankruptcy Procedure 2019's disclosure requirements when hedge funds and other institutional investors appear as groups in Chapter 11 cases. In particular, this Note traces the history of Rule 2019 and the various corporate reorganization mechanisms to explain the split between two bankruptcy courts on whether these groups constitute “committees” under Rule 2019. This Note cites the fundamental differences between these groups and protective committees--the committees charged with representing security holders under federal equity receiverships. Hence, ad hoc groups do not have to make detailed disclosures of each individual transaction, disclosure that would be required if the groups were considered “committees.” However, the current industry practice insufficiently discloses the economic interests at stake. This Note advocates renewed emphasis on individual fund holdings and revision of Rule 2019 to require disclosure of positions at other areas of the capital structure.

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