On the latest episode of Debtwire's Legal Lens podcast, White & Case Financial Restructuring and Insolvency partner David Turetsky discusses prepackaged bankruptcy, analyzing how it differs from traditional bankruptcy as well as the opportunities and challenges it provides.
Turetsky highlights several advantages to prepackaged bankruptcy, including speed, cost and certainty of the outcome. However, he also notes that prepackaged bankruptcy can limit opportunities to use "the full range of bankruptcy tools to restructure operations as compared to a traditional case."
Turetsky explains: "The central thesis of a prepack is to isolate the class or classes of claims that need to be restructured, reach agreement with a critical mass of creditors holding those claims and incorporate the restructuring terms in a plan that otherwise leaves all other creditors unaffected."
When asked about the outlook for prepackaged bankruptcies, Turetsky states: "In terms of anticipated trends, bankruptcies tend to be a reflection of what's going on in the market and business issues that are occurring in the market, and prepackaged cases are no different." He adds that "Companies are going to seek to use prepacks more aggressively and in more ambitious ways."
Listen to the episode here.
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