What is a “prepackaged bankruptcy”?

A “prepackaged bankruptcy” is a form of Chapter 11 bankruptcy that allows the debtor, such as a business or individual, to present a reorganization plan to creditors for approval prior to filing the formal bankruptcy petition. This type of bankruptcy is meant to simplify and expedite the process of reorganizing finances, because the debtor can present the plan to creditors in advance, allowing the reorganization to be completed more quickly than a normal Chapter 11 process. The main benefit of a prepackaged bankruptcy is that it can be substantially less expensive and time consuming for the debtor. As opposed to a normal Chapter 11 process, there is often less time spent negotiating with creditors since the creditors will already have reviewed the reorganization plan prior to filing the bankruptcy petition. This means the debtor can get back on their feet faster and with less disruption to their business or personal life. In Florida, a person or business filing for a prepackaged bankruptcy must still follow the same procedures as with any other type of Chapter 11 bankruptcy. This includes filing a petition with the court, listing all the debtor’s assets and liabilities, providing information on their income and expenses, and proposing a reorganization plan to the court for approval. Creditors also have the right to object to the prepackaged bankruptcy plan, which the court must consider before approving the reorganization.

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What is a “prepackaged bankruptcy”?

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