Conclusion

As we have seen in this guide, pre-packs are a flexible tool that, while employed globally in myriad ways, share the essential characteristics of being privately negotiated deals that are implemented through an expedient formal insolvency. They are, however, not a ‘one-size fits all’ restructuring solution.

Their inherent flexibility makes the pre-pack popular as a means to preserve a struggling business as a going concern. The case studies in this guide show that parties to highly complex restructurings have used pre-packs as a work-out solution, pre-agreeing a reorganisation deal and implementing it in an expeditious manner. The unifying theme throughout being to limit further damage to an already struggling business by focusing on discretion and efficiency.

However, pre-packs are not without their critics. Concerns continue to be raised in various jurisdictions on transparency, inclusivity, prejudice to creditors who may have been left in the dark and the involvement of related parties. Thus far, these criticisms have been addressed in different ways – whether relying on court-based debate, voluntary regulators, supervisory bodies or legislation.

As practitioners and legislators worldwide work to develop robust restructuring regimes, it will be interesting to see how different jurisdictions seek to resolve the tension between the benefits and perceived weaknesses of pre-packs. This balancing act is complicated by the significant changes to the global insolvency landscape that have resulted from the covid-19 pandemic. We are now at a point where various emergency measures that were introduced in response to covid-19 are being phased out, while more fundamental changes to insolvency regimes are being introduced by many countries. The role that pre-packs will play in long-term responses to covid-19 is currently unclear, but it is an area that will certainly be watched closely by practitioners around the world.


Notes

[1] Jacqueline Ingram is a partner and Ryan Cattle is an associate at Milbank LLP.

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