Creditor protection through mandatory disclosure since long is a highly debated issue among corporate lawyers. This paper considers whether the legal system should compel corporations to disclose information publicly in order to better protect its creditors. First, the paper elaborates on the various economic rationales of mandatory disclosure advanced by proponents of that approach. Second, it rehearses the theoretical framework of mandatory disclosure. Third, it gives a brief overview of the law on those mandatory disclosure requirements that primarily or at least in part aim at corporate creditor protection. Fourth, it outlines limitations of mandatory disclosure with respect to creditors and debtor companies. Fifth, it briefly surveys several important challenges to mandatory disclosure regulation with respect to materiality, standardization, comprehensibility and timeliness. And finally, this paper deals with various legislative options to enforce creditor-protective mandatory disclosure.
