prepack. Method of filing for company reorganization under Chapter 11 that is relatively cheaper, quicker, and more risk-free and hassle-free. It short-circuits the normal bankruptcy filing and out-of-court workout procedures. In a prepack, the management of the failed company negotiates with its major creditors the general terms of its bankruptcy plan and, after taking their and two-thirds of its shareholders' consent, files the plan with the bankruptcy petition. Employed usually when the significant creditors are few and the company is free from heavy contingent or disputed liabilities, it might take only 30 to 90 days instead of years to go into reorganization and come out clean. Creditors normally agree to a prepack because they can recover more in this scheme than in a liquidation, and their claims are preserved and not washed out as in other types of bankruptcies. The management is usually allowed to retain an equity stake in the reorganized company and there may be associated tax benefits.