For Better or Worse, Prepacked and Pre-Negotiated Filings Now Account for Most Reorganizations

Prepackaged, pre-negotiated and prearranged bankruptcy filings (collectively referred to herein as “pre-filings” by the authors) account for a majority of cases that emerge from chapter 11 through a confirmed reorganization plan.

Prepacks have been around for a long time, with the business usage of the term “prepackaged bankruptcy” traced back nearly 30 years and articles and academic literature referring to prepacks dating back to the early 1990s. Prepackaged filings increased in frequency in the early-to-mid 1990s in the wake of the original leveraged buyout (LBO) bust, but then faded as corporate capital structures became increasingly complex, only to make a comeback since the end of the 2009 recession.

In an article for the American Bankruptcy Institute Journal, Samuel Star and John Yozzo account for how prepackaged and pre-negotiated filings now account for more reorganizations, and what impact this trend will continue to have.