Pre-pack (Prepackaged Bankruptcy)

Category: legal

A restructuring strategy where the debtor negotiates and secures approval for a reorganization plan from creditors *before* filing the bankruptcy petition.

A pre-pack is the "speedrun" bankruptcy. Traditional Chapter 11 takes years and burns millions in legal fees. By negotiating the deal entirely out of court and getting creditors to vote "yes" in advance, a pre-pack can clear the court system in a matter of weeks, saving the brand’s reputation.

Common Examples

• To minimize disruption to their supply chain, the manufacturer executed a prepackaged bankruptcy that was confirmed by the judge in just 30 days.
• A prepackaged bankruptcy requires extreme cooperation between the debtor and its major institutional bondholders prior to the filing.