The pre-reorganisation system serves as a transitional mechanism between out-of-court restructuring and formal bankruptcy reorganisation. It is being increasingly applied to help courts more accurately assess a company’s reorganisation value, facilitate preparatory arrangements for proceedings, and ultimately improve the efficiency and success rate of corporate rescue.
The origins
The pre-reorganisation system originated in US judicial practice as a mechanism for rescuing distressed companies. A landmark case in 1986 involving Crystal Oil Company pioneered the procedure, enabling approval of a reorganisation plan before formal filing of a reorganisation application.
This innovative approach helped the company overcome…
