Both plans are off the table. On August 4, 2026, the United States Bankruptcy Court for the District of Maryland denied approval of the two competing disclosure statements in the Chapter 11 case of the Roman Catholic Archbishop of Baltimore, holding that neither satisfies section 1125 of the Bankruptcy Code and that each describes a plan of reorganization that is patently unconfirmable. The denial was entered without prejudice. As a scheduling matter it was decisive.

The Court had set a confirmation hearing to begin on September 14, 2026, which required solicitation packages to be mailed on or before August 10, 2026. The order states plainly that the Court does not find adequate time to consider amended competing disclosure statements before that date, and that the deficiencies in the pending documents are too significant to justify having the parties spend more time or money on them in their current form. Six days is not a revision cycle. The confirmation schedule the Court described as tight by design has now been overtaken by the substance of what was filed against it.

The immediate consequence extends beyond the calendar. In March 2026, seven survivors of child sexual abuse moved for relief from the automatic stay to pursue their claims in the Maryland state courts. The Court did not decide those motions. It continued them, along with the automatic stay itself, to September 30, 2026, on the theory that a firm confirmation schedule gave the parties a short runway to reach a global, consensual resolution before the status quo changed. That runway is now shorter than the parties assumed, and the September 30 date arrives with no approved disclosure statement, no solicitation, and no confirmation hearing in front of it.

The Roman Catholic Archbishop of Baltimore is operating as a debtor in possession under section 1107 of the Bankruptcy Code. It is the only debtor before the Court. That fact does a great deal of work throughout the order, because much of what both plans propose depends on entities that have not filed and are not subject to the Court’s in rem jurisdiction.

The creditor body is unusual in composition and central to how the Court reads the disclosure obligation. All members of the Official Committee of Unsecured Creditors are survivors of child sexual abuse. The Court treats that composition as the reason sections 1125 and 1129 matter here in the first place, noting that those provisions exist in large part to protect the creditors of the estate, which in this case are primarily survivors. The remaining constituencies are the Debtor’s insurance carriers, an Ad Hoc Committee of Parishes, Schools, and Affiliates, and the Covered Parties, meaning the related entities included as additional insureds under the Debtor’s current and legacy insurance programs.

The filing was a direct response to legislation. In April 2023, the Maryland General Assembly passed the Maryland Child Victims Act, which eliminated the statute of limitations on civil lawsuits involving child sexual abuse. The Debtor filed its Chapter 11 petition on September 29, 2023, two days before the statute took effect on October 1, 2023. On the petition date, the Debtor also moved to extend the automatic stay to the Covered Parties under its insurance programs.

The Court granted that relief on an interim basis and then continued it under a Second Interim Order extending the automatic stay to certain related entities. That order has now been in place for nearly three years. The order under review identifies this as the source of the current posture. Three years of stay protection for both the Debtor and a set of nondebtor entities, periodic mediation among the Debtor, the Committee, and the Insurers, litigation in the main case and in two separate adversary proceedings, and still no plan proposing a global resolution. What the Court has instead is two competing plans and, in its own description, relatively little agreement on the best path forward.

Length is not the holding, but it is the entry point. The Court found that each document provides an appropriate level of detail about the key prepetition and postpetition events concerning the Debtor, so the deficiencies it identified are not a failure to cover the history of the case. The Debtor’s amended disclosure statement runs 54 pages without exhibits. The Committee’s third amended disclosure statement runs 158 pages without exhibits. The Court took 16 pages to explain why neither works.

Section 1125(a)(1) requires information of a kind, and in sufficient detail, that would enable a hypothetical investor of the relevant class to make an informed judgment about the plan. The determination is case by case and largely within the discretion of the bankruptcy court. The Court applies that standard here through a formulation borrowed from an older decision: a disclosure statement must be meaningful to be understood, and it must be understood to be effective.

The Court credits counsel for trying to address pending objections and legal hurdles by building optionality into the plans and adding disclosure to the documents. It then explains why those efforts backfired. Both documents grew to the point where information gets lost or confused inside them, both carry defined terms and legalese that complicate an already complicated plan structure, and both are internally inconsistent in certain respects. The United States Trustee had flagged inconsistent and inaccurate information regarding the third-party releases in the Debtor DS, and had described the Committee’s excessive use of defined terms as rendering the plan incomprehensible and the disclosure statement that describes it lacking in adequate information.

The sentence that carries the Court’s point most directly is the one addressed to the audience for these documents. Creditors should not need lawyers or translators to read a disclosure statement or understand a proposed plan of reorganization. In a case where the primary creditors are survivors voting on the treatment of their own claims, that observation is not a stylistic preference. It is the statutory purpose.

The second half of the analysis is separate from disclosure quality and independently fatal. A court may disapprove a disclosure statement where the underlying plan is clearly unconfirmable, and the Court found provisions in both plans that make a confirmation hearing on them futile. Not every section 1129 element belongs at the disclosure statement stage, and the order says so. Certain defects are severe enough that soliciting votes would waste estate resources and further delay any recovery for creditors.

The most consequential ruling in the order concerns three trusts. The Debtor’s plan includes only a small fraction of the value of its Sexual Misconduct Insurance Program Trust in plan distributions, and excludes the value of its General Insurance Program Trust and its Health Benefits Program Trust entirely. Those exclusions flow through to the section 1129(a)(7) liquidation analysis, which is where the Court found the disparity.

The Court had already told the parties where it was headed. In its July 13, 2026 statements, incorporated into the August 4 order as if fully rewritten, the Court found that based on the plain language of the trust documents, Maryland law, and section 541(c)(2), the insurance trusts do not appear to be valid spendthrift trusts protected by that subsection, and that any discretionary aspects of the trustee’s powers do not appear to change the analysis. The trusts appear to be property of the Debtor’s estate.

Two doctrinal points sit underneath that conclusion, and both are stated at a level of generality that makes them portable to other diocesan cases. First, section 1129(a)(7) sets a floor a debtor must clear, not a measure of what an adequate or fair and equitable distribution looks like. Clearing the hypothetical Chapter 7 comparison does not establish that the proposed distribution is enough. Second, and independent of valuation, a debtor must disclose all of its assets and explain how those assets affect valuation. Any interest the debtor holds in property becomes property of the estate on the petition date under section 541(a), and the order states the consequence in one line: the debtor does not get to decide unilaterally what assets it discloses or makes available for distribution to creditors.

That is a disclosure holding as much as a substantive one. Even where the Debtor believes an asset is unavailable to creditors, the asset and its value must appear in the disclosure statement, together with the Debtor’s explanation of why it is excluded. The Court suggested the Debtor take a hard look at its asset base and identify, perhaps in a schedule, any assets in which the estate might have an interest and the basis for excluding them.

The Debtor DS also fails to articulate clearly how creditors may collect against the insurance assets. Objecting parties argued that any disclosure statement must contain adequate information about settlements with insurers and explain the effect of those settlements on the plan and on creditors’ collection rights. The Court agreed, and added a related point about the release architecture. Setting aside the legality of the proposed release, injunction, and gatekeeping provisions, which it reserved for confirmation, the Court found that the Debtor DS does not explain what happens if a creditor declines to grant a release, whether that jeopardizes any insurance settlement or the plan itself, and how a creditor is supposed to assess that risk. If a creditor cannot assess it, the consensual character of the release is itself in question.

The second defect in the Debtor’s plan is structural. The plan places general unsecured creditors into three separate impaired classes, each holding the same priority of distribution under applicable nonbankruptcy law and the Code, and proposes very different treatment across them.

Section 1122(a) permits a claim to be placed in a class only if it is substantially similar to the other claims in that class. Section 1123(a)(4) requires the same treatment for each claim within a class. The Code does not require that all substantially similar claims be placed together, but courts generally require valid business, legal, and factual reasons to justify separate classification, and the Fourth Circuit has held that separate classification may only be undertaken for reasons independent of a debtor’s motivation to secure the vote of an impaired, assenting class. The purpose of the limit is to prevent a debtor from finding a few cooperative impaired creditors and placing them in a class of their own.

The Class 5 mechanics are the part practitioners will read twice. A class the debtor can pay in full is rendered impaired by withholding postpetition interest, and the resulting impairment supplies a voting class. That maneuver is familiar. What is notable is that the Court reached it at the disclosure statement stage rather than reserving it for confirmation, and concluded that under the particular circumstances of this case the classification scheme renders this version of the plan unconfirmable.

The order also folds in a disclosure point that will interest anyone tracking diocesan cases. The Committee raised the Debtor’s commitment to enhanced child protection protocols, framing it as a confirmation issue. The Court took it up as a disclosure issue instead. Given the events that led to the filing and the nature of the majority of claims, a hypothetical reasonable investor would want to understand the Debtor’s position on enhanced child protection protocols and how they would be implemented under the plan. That information, in the context of this case, is reasonably related to the ability of creditors to cast informed votes. Nonmonetary plan commitments become part of the adequate information analysis when the creditor body is voting on them.

The Committee’s plan fails on a different axis. It includes language suggesting that nondebtor entities may be substantively consolidated upon the occurrence of certain events. The Court had already stated that it will not substantively consolidate the Debtor with its nondebtor affiliates on an involuntary basis, and it repeated the holding here: the proposed action violates the express terms of the Bankruptcy Code and renders the plan unconfirmable under section 1129(a)(3).

The Committee’s response was that its plan seeks consolidation only of debtor entities or entities that consent. The Court found that this does not change the analysis at the present stage, and the reasoning is arithmetic before it is doctrinal. There is one debtor before the Court. The Committee has presented no evidence, and articulated no basis for believing, that other entities affiliated with the Debtor will file Chapter 11 cases or voluntarily contribute their assets to the plan. A structure that depends on those events is a structure built on conditions that have not occurred and that no party before the Court can compel.

The Court situated the ruling in a line of authority that restructuring professionals in mass tort and diocesan cases will recognize. The Eighth Circuit’s decision in the Archdiocese of Saint Paul and Minneapolis case declined substantive consolidation of nondebtor nonprofit entities. Courts describe substantive consolidation as an extraordinary remedy grounded in equity, and consolidation reaching a nondebtor requires an even more cautious application of the usual test. The order also cites the Supreme Court’s discussion of section 1123(b)(6) in Harrington v. Purdue Pharma L.P., and notes that sections 1123 and 1129 are focused on the debtor and property of the estate.

The distinction the Court draws is worth isolating, because it is not a blanket rule against creditor plans. A nondebtor plan proponent such as a committee can fund a plan with property of the estate. That is different from a plan that reaches entities, or the assets of entities, not currently before the Court and not subject to its in rem jurisdiction. The line is jurisdictional rather than structural. Who proposes the plan matters less than what the plan proposes to reach.

Feasibility follows from the same facts. A plan must be reasonably likely to succeed on its own terms without a need for further reorganization, and plan funding that is too speculative renders a plan patently unconfirmable. The Court found the Committee’s conditions speculative and lacking a legal basis, and held that a plan relying on nondebtor participation without the consent or commitment of those parties is speculative, uncertain, and potentially misleading to creditors. Each corporation remains a separate legal entity with its own debts and assets, even when affiliated.

The Committee’s treatment of insurance assets drew a separate finding. Regardless of the proponent, any plan must comply with applicable law in the treatment and transfer of insurance rights and policies. The Court found that the transfer and trust provisions of the Committee’s plan create issues that currently render it unconfirmable under section 1129(a)(3).

Objecting parties argued that the Committee DS is incomplete and redacts a large portion of potentially relevant information. The Court agreed with the general principle and then narrowed it in a way that cuts against the Committee twice.

On the first point, a disclosure statement and plan cannot go out for solicitation with redacted information. The purpose of the document is to inform creditors’ votes, and withholding information from the solicitation package undercuts the objective of section 1125.

On the second point, the Court held that where the redacted information concerns the separate assets and liabilities of nondebtor parties, that information is not necessary or appropriate in a disclosure statement concerning the debtor, absent special circumstances. Two exceptions are identified. A disclosure statement may include information about a nondebtor entity that is voluntarily providing plan funding, and it may include such information where relevant to valid claims or causes of action asserted by the estate.

What a disclosure statement cannot do is described directly. It cannot be used to disseminate information about a nondebtor entity for the purpose of prodding a settlement, to impose bankruptcy-like disclosures on that entity, or to confuse creditors voting on the plan. The Court identified the last of these as its particular concern here, because the Committee DS contains financial information regarding entities that are not before the Court and suggests potential contributions from them. Unless and until such an entity agrees to the disclosures, becomes a debtor, or is shown to hold assets of this estate, that information does not belong in the document.

The practical effect is that the Committee cannot solve its redaction problem by unsealing. Unredacting the nondebtor financial information would cure the solicitation defect and deepen the impermissible-content defect at the same time. The path forward requires deciding which entities the plan actually depends on and obtaining their consent, not adjusting what the document reveals about them.

The order is unusually well marked for anyone building a brief on disclosure statement denial or on the treatment of nondebtor assets in a diocesan case. The citations cluster around five questions.

The denial is without prejudice, and the order is explicitly interim in nature so that it does not foreclose future efforts to obtain approval of a disclosure statement. Nothing prevents either proponent from filing again. The question is what a revised filing would have to look like.

For the Debtor, the work is concentrated in the liquidation analysis and the asset schedule. The insurance trusts have to be addressed on the Court’s stated view that they appear to be property of the estate, which means either including more value in distributions or building a record that survives the section 541(c)(2) analysis the Court has already run once. The classification scheme has to be rebuilt or justified on grounds independent of creating an impaired accepting class. The disclosure gaps around insurer settlements, collection rights, release mechanics, and child protection protocols are addressable, but they cut against the instruction to shorten and simplify, which is the tension the Debtor now has to resolve.

For the Committee, the problem is harder because it is not primarily a drafting problem. A plan that reaches nondebtor affiliates cannot be redrafted into confirmability while those entities remain outside the case and outside the Court’s jurisdiction. Either affiliated entities file, or they consent and commit, or the plan has to be rebuilt around property of this estate. The redacted nondebtor financial information has to come out of the document rather than be revealed in it.

The closing paragraph of the order reads as an instruction rather than a criticism. The Court encouraged both proponents to step back and assess what kind of plan will work in this case and how best to describe that plan to all creditors, and observed that the most brilliant, intricate, and innovative plan will mean little if the people affected by it do not understand it or how it works. In a case where the creditors are survivors and the vote is on the treatment of their own claims, comprehensibility is not a drafting courtesy. It is the thing section 1125 was written to require.