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John Penn in Dow Jones Daily Bankruptcy Review: Growth In Prepackaged Bankruptcies
12/03/2009

BankruptcyData.com recently released an analysis of corporate Chapter 11 filings and noted the increased number of prepackaged bankruptcy filings in recent years. In 2007, there were three prepackaged filings involving about $2 billion in assets. In 2008, the number jumped to 12 with $4 billion in assets. And from January until November 2009, there have been 30 prepackaged filings with about $124 billion in assets being handled.

And there still may be a surge left in the year’s last few weeks.

A prepackaged bankruptcy is generally understood to be a bankruptcy filing where creditors’ votes for and against the plan of reorganization are solicited before the case is filed. The case is then filed with the plan, and it swiftly moves toward confirmation relying on the pre-petition votes. Debtors have to prove, among other things, that the information provided to creditors about the plan meets the Bankruptcy Code’s requirements for a disclosure statement (generally, that it provides adequate information for a creditor to make an informed decision regarding the plan). They also have to prove that the plan satisfies the Bankruptcy Code’s other plan confirmation requirements.

Reprinted with permission from Dow Jones Daily Bankruptcy Review, November 25, 2009. To read the full article, click on the PDF linked below.