Clients are usually very concerned about what the filing of a bankruptcy will do to them in terms of publicity. For individuals, this concern is usually about having friends, neighbors, and relatives learning of their financial difficulties. But for businesses this concern can be about much more than vanity or embarrassment.
Businesses going through a reorganization have to be concerned about how the news will affect relationships with a number of key stakeholders. These interested parties include principal lenders and creditors, suppliers and vendors, employees, and the public at large.
We want to be prepared with a clear and consistent message that will support our reorganization efforts. We work to create and develop a message strategy that will aid us in our legal efforts.
Each of the stakeholders is likely to be addressed somewhat differently. We need to be able to respond to the particular questions and concerns of each.
Principal Lenders and Creditors. Usually these parties will be aware of the problems, and often of the coming reorganization. We are talking here about those lenders and creditors that are vital to our client’s business. We need to make sure they are comfortable. We need to assure them that our success is probable or even a certainty. They need to know when and how they will be paid and that their interests are and will continue to be protected.
Our goals are to keep them as members of our collective effort and to avoid the costs and adverse relations of litigation. This often means they need to be informed early and continually.
Suppliers and Vendors. The goal in addressing these stakeholders is to maintain the continued delivery of vital goods and services. There are lots of legal options for providing them with the assurances they may want. Communicating those options can be key to continuing the flow of goods and services without disruption.
Employees. The business likely cannot operate without its employees. The goal is to keep all critical employees and to avoid any mass exit.
Unless employees have proper assurances that their jobs are not soon to be lost, they will almost certainly leave, and quickly. The reorganization plan needs to be shared with employees early. They need to know that their pay is safe and that their benefits will continue. For most of our clients, the employees know full well that the business is suffering or even in trouble. They now need to know that the reorganization effort is in good hands. They need to believe that the reorganization will succeed.
General Public. For many businesses this is not much of a concern. For others, it can be. The public can be addressed through press releases, email campaigns, and direct mail. Questions about gift cards, layaway, and future purchase returns should all be addressed. For some businesses, warranty and maintenance concerns are the big issue. We have also had cases in which avoiding publicity was the best approach. By changing the name of the corporation before filing, we by and large avoided any publicity about the filing itself.
Communication done well can be very valuable to a reorganization effort. Give proper consideration to your message. Define that message and convey it in a way that will promote your reorganization effort.