The “Super Speedy Prepack” Has Arrived…
Is That a Big Deal?
Prepackaged (“prepack”) Chapter 11 filings have been prevalent in the last few years but it wasn’t until this year that we saw the debut of the “super speedy prepack," that is, a prepackaged filing that runs the course of reorganization in Usain Bolt-like time — let’s say a month or less from filing to emergence. It started in early February with FULLBEAUTY Brands, a prepack that had its plan confirmed within one day of filing and emerged from Chapter 11 three days later. If records were made to be broken, FULLBEAUTY didn’t hold its place in the record books for very long. Sungard Availability Services filed a prepack on May 1 and had its plan of reorganization confirmed within 19 hours of filing — one hour faster than FULLBEAUTY — and emerged from bankruptcy in less than two days. It was strange to see business media stories that covered these cases measuring their duration in terms of hours.
Clearly these two cases were exceptional, but 2019 has also featured several other large reorganizations completed in a matter of days or a few short weeks. It is no longer noteworthy for a prepack to emerge from Chapter 11 within a month or so of filing compared to a typical 60 to 90-day timeframe in years past. Back in February, Arsenal Energy Holdings was in and out of Chapter 11 in ten days after having equitized over $850 million of notes, while Jones Energy was done with its reorganization about a month after filing.
Global Co-Leader of Corporate Finance & Restructuring