Also known as prepack. An agreement among creditors and stockholders reached before a bankruptcy filing that governs key elements of the bankruptcy plan, rejections, and acceptances. The plan and a disclosure statement are usually filed when a Chapter 11 case commences. Prepackaged plans can help simplify the bankruptcy process and minimize periods of business disruption. However, a risk remains that creditors opposing the plan will take action against the debtor while the plan is being negotiated and no automatic stay limitations apply.

For further information, see Practice Note, The Prepackaged Bankruptcy Strategy and Timeline of a Prepackaged Bankruptcy Case.