Many of the gigantic bankruptcies of 2009 did not follow the usual bankruptcy rules. In cases such as General Motors Corp. (Case No. 0950026), Chrysler LLC (Case No. 50002) and Calpine Corporation, exigent circumstances forced creditors to make a dramatic shift in the strategies previously used in Chapter 11 bankruptcy cases from preparing a plan of reorganization to making a fast sale of the bankruptcy estate assets under § 363 of the Bankruptcy Code. Traditional Chapter 11 reorganizations have proven to be costly and disruptive for corporate debtors. Section 363 sales have largely supplanted traditional Chapter 11 reorganizations because they are faster and more cost efficient. Though not a new concept, parties have recently opted to pursue “pre-packaged” bankruptcy filings or “pre-packs.”
Reprinted with permission from LJN's Equipment Leasing Newsletter.