Definition of Prepackaged bankruptcy:
A prepackaged bankruptcy is a plan for financial reorganization that a company prepares in cooperation with its creditors that will take effect once the company enters Chapter 11. The aim of a prepackaged bankruptcy—which must be voted on by shareholders before the company files its petition for bankruptcy —is to save expenses and shorten the turnaround time to emerge from bankruptcy.
The ability for a company to liquidate or claim bankruptcy through a financial organization that is structured to help companys who are in financial distress.
The idea behind a prepackaged bankruptcy plan is to shorten and simplify the bankruptcy process in order to save the company money in legal and accounting fees, as well as the amount of time spent in bankruptcy protection. A proactive company in distress will notify its creditors that wish to negotiate terms of bankruptcy before it files for protection in court.
How to use Prepackaged bankruptcy in a sentence?
- Some creditors, however, may take advantage of being forewarned of an imminent bankruptcy and become uncooperative, undermining the goal of being prepackaged.
- The goal of such a plan—which must be approved by shareholders and a court—is to speed up the overall time a company is under bankruptcy protection.
- A prepackaged bankruptcy is a strategy to emerge from bankruptcy by negotiating with creditors in advance of Chapter 11 proceedings.
Meaning of Prepackaged bankruptcy & Prepackaged bankruptcy Definition