A bankruptcy in which a debtor and its creditors pre-negotiate a plan of reorganization and then file it along with the bankruptcy petition.
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A situation whereby a company and its creditors agree on the terms of bankruptcy before it is filed with bankruptcy court. That is, the company and its creditors agree how and how much each creditor will be repaid and the terms of repayment. All parties, including shareholders if applicable, must agree to the prepackaged bankruptcy before it takes effect. A prepackaged bankruptcy makes it easier and less expensive for all parties when a company files Chapter 11 and reorganizes.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved
A Chapter 11 bankruptcy settlement in which the reorganization and main provisions have been agreed to by creditors and stockholders in advance of the filing.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.