Research On U.S. Prepackaged Bankruptcy Mechanism And Its Institutional Reference For China

Generally, there are three feasible ways for financially distressedcompanies in the United States to resume operation, which are, traditionalChapter11bankruptcy, out-of-court restructuring, and prepackagedbankruptcy. A prepackaged bankruptcy is a reorganization of firm’s debtcontracts that has been negotiated or accepted by creditors prior tobeginning of a bankruptcy proceeding. A pre-pack is a hybrid method thatcombines the benefits of Chapter11reorganizations with those of publicworkouts. Specifically, pre-packs eliminate the holdout problem associatedwith workouts; at the same time, they avoid a prolonged stay in Chapter11,which shall be referenced by China’s restructuring legislation. Under thisproposition, the dissertation is developed into four parts:The first chapter introduces the concept of prepackaged bankruptcyand its source of law; meanwhile, the classifications of pre-packs are alsosorted out in this part with recent development in the United States. Theabove contents all provide necessary theoretical basis for further analysis ofthe dissertation.Chapter Ⅱ builds up the basic structure of prepackaged bankruptcy. Itis modeled on the provisions of the U.S. Bankruptcy Code and BankruptcyRules, with references to the Amended Procedural Guidelines in the U.SBankruptcy Court for the Southern District of New York. This leads to thecomparative study of its institutional advantages compared with traditional Chapter11and out-of-court restructuring, such as time saving, costreduction and business control maintenance, etc. This chapter also carriesout detail analysis of two recent high-profile American cases in order toelaborate the structure and the value of prepackaged bankruptcy in practice.The third chapter discusses in depth about the operation mechanism ofpre-packs, which is divided into four aspects including the disclosurestatement, solicitation of acceptances and rejections, confirmation and thelock-up agreement. Moreover, the2005amendment of U.S. BankruptcyCode produces great impact on prepackaged bankruptcy, which largelyencourages and promotes its utilization. However, every institution has twosides, so does prepackaged bankruptcy. Its speedy advantage also bringslimitations, making it difficult to enjoy some of the key rights under theBankruptcy Code.Chapter Ⅳ reviews and summarizes the current restructuring systemof China. With aforementioned basic views and propositions in this paper,it analyzes the feasibility of introducing prepackaged bankruptcy into ourlegal regime. It also points out the problems we shall pay attention to whenintroducing this mechanism, so as to better guide and improve China’sbankruptcy legislation. With regard to the construction and improvement ofthe legislative arrangements, this dissertation puts forward specificlegislative ideas and proposals.