Quickie Bankruptcies: Speed Isn't Everything

Bankruptcy? Southland Corp. would sooner dance with the devil than submit to the hassles and indignities of Chapter 11. Still, the mind-boggling $4.9 billion debt that the 7-Eleven convenience-store chain loaded on to thwart a 1987 hostile takeover was exacting its own hellish toll. Ungodly interest payments were rapidly draining coffers, and losses were mounting.

Then, Dallas-based Southland found a quick way out of the squeeze: a prepackaged bankruptcy, a novel means for corporations in potentially terminal financial distress to avoid many of the problems associated with conventional bankruptcies. Prepacks are becoming all the rage among the walking wounded of 1980s' overleveraging.