Bangkok--15 May--Standard & Poor's
Data from the first quarter of 2009 indicate that the count of prepackaged bankruptcy filings is already at an eight-year high, said an article published today by Standard & Poor's. And in terms of amount outstanding, the volume of prepacks is at a record high within the past decade.
A prepack is defined as a financial reorganization plan that a company prepares in cooperation with its creditors and that takes effect once the company enters bankruptcy. In doing so, issuers may be able to shorten and simplify the bankruptcy procedure relative to the more expensive and onerous Chapter 11 filing, according to the article, titled "U.S. Default Research: With The Lure Of A Fast Resolution, Prepackaged Bankruptcy Filings Gain Prominence (Premium)."
The current funding climate remains unfriendly to issuers that are most in need of funds, though pressure certainly has eased from the fever pitch in late 2008. Defaulted issuers are among those that have and will continue to feel the bite from severe bottlenecks in debtor-in-possession and exit financing options.
"As legal, accounting, and management fees escalate, companies and their investors will be pressed to find solutions that provide issuers with speedy access to capital, in addition to saving on costs and fees associated with bankruptcy," said Diane Vazza, head of Standard & Poor's Global Fixed Income Research Group. "One format that likely will gain appeal is the prepack."
First-quarter 2009 resulted in a burst of prepackaged bankruptcy filings, with a total of six parent-level issuers listed in the U.S. A total of 94 bonds were affected by the 2009 filings from these issuers, with debt worth US$16.5 billion.
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Media Contact:
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Analyst Contacts:
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