US pre-packs and US Bankruptcy Code, s 363 asset sales
Produced in partnership with Julie Lanz of Skadden Arps Slate Meagher & Flom LLP
US pre-packs and US Bankruptcy Code, s 363 asset sales

The following Restructuring & Insolvency practice note Produced in partnership with Julie Lanz of Skadden Arps Slate Meagher & Flom LLP provides comprehensive and up to date legal information covering:

  • US pre-packs and US Bankruptcy Code, s 363 asset sales
  • What is a pre-pack?
  • Advantages of a pre-pack
  • Limits of a pre-pack
  • Asset sales in bankruptcy
  • Asset sales pursuant to a plan
  • Section 363 asset sales
  • Free and clear
  • Right to credit bid
  • Transfer tax

What is a pre-pack?

A pre-pack is a type of chapter 11 bankruptcy case where the debtor formulates, negotiates and solicits votes on a plan of reorganisation prior to filing a chapter 11 petition. Key points to note include:

  1. the hard work of strategising and negotiating with creditors and other interest holders is finalised before the company files for bankruptcy protection and appears in a bankruptcy court

  2. in a pre-pack, a debtor does not file for bankruptcy until its proposed plan of reorganisation has the support of enough creditors and interest holders to confirm the plan (11 U.S.C. § 1126(c) and (d))

  3. unlike in a traditional chapter 11 filing, in a pre-pack the debtor files its disclosure statement, proposed plan of reorganisation, and a motion seeking approval of both on the petition date, and usually seeks to have that plan confirmed on an extremely expedited basis, often in as little as 30–45 days (some recent pre-packs have been completed in one day)

  4. a pre-pack is well suited to a company that needs to deleverage its capital structure, but otherwise has solid business operations

Advantages of a pre-pack

A pre-pack has a number of advantages:

  1. pre-filing, the debtor controls the restructuring process and determines what shape its reorganisation should take

  2. once in bankruptcy, the debtor is afforded the protections offered to a traditional chapter 11 debtor, including:

    1. the

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