In May 2010, the Texas Rangers-a Major League Baseball (MLB) franchise-unveiled

Question

In May 2010, the Texas Rangers-a Major League Baseball (MLB) franchise-unveiled $575 million plan that involved the sale of the Texas Rangers to a group led by Nolan Ryan, a former pitcher for the team. To quickly complete the deal, the Texas Rangers filed for a prepackaged (prepack) bankruptcy The news story on the Texas Rangers' prepackaged bankruptcy indicated that the MLB would agree to provide the Rangers with a new credit facility so that the franchise could meet all of its obligations Which of the following features of prepacks does this statement support? O Prepackaged bankruptcies help settle nuisance claims and get approval from all of the creditors. O Prepackaged bankruptcies allow for companies to receive debtor-in-possession (DIP) financing ahead of time Consider the following statement: I for the reorganization plan before filing for bankruptey Based on your understanding of prepackaged bankruptcies, identify if the statement is true or false. O True O False

Explanation / Answer

The motto of prepacked bankruptcy is to shorten and fasten the legal process and reduce the accounting fees by getting approval from creditors with a reorganization plan before filing for bankruptcy.

So,

1) Prepackaged bankruptcies allow for companies to receive debtor in possession financing ahead of time to take care of day to day operating expenses and emerge quickly from its bankruptcy situation and become profitable.

2) The statement " In a prepack, the debtor gets the majority of the creditor's approval for the reorganoation plan before filing for bankruptcy" is true.

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