As the pandemic continues not a day seems to go by without another company being added to the long list of restructuring or bankruptcy candidates. Major brands are filing for bankruptcy daily and unfortunately, more will follow.
Businesses are under siege and employees, customers, vendors, landlords, bankers, investors and creditors are on edge.
To some industries, however, the new normal is very familiar. The airline industry, for example, seems to go through this every decade or so. Many airlines have survived and thrived throughout these cycles and remarkably, passengers seem to have been largely unaffected by the financial turmoil in the industry.
It's proof that effective communications can drive positive restructuring outcomes more than any legal filing or battles with creditor committees. How companies tell their restructuring stories is a choice. Here are a few observations:
Open the war room: The best way to prepare for a Chapter 11 filing is with partners who disagree with the C-suite. Open the war room to creative thinkers. Better yet, step out of the war room. Everyone is rooting for a viable financial plan but it also has to be inspiring to those around you. The lawyers and bankers will help with the numbers. You will need others to help develop an inspiring story and prepare for the unexpected.
Once you file, focus on the now: The restructuring process is a congested highway leading to a better destination. Management teams will be busy with filings, long meetings with creditors and court dates.
However, employees, customers, vendors, investors, creditors, communities and other stakeholders will want to know what is happening once the Chapter 11 press release crosses the wire. Build in time to explain the situation to them and let them know how you will manage through the process. You cannot over-communicate in this situation.
Speed is everything: Once news of the restructuring is out, financial, business and trade media will begin discussing your chances of survival. Reporters will tap into their networks of bankers, analysts and vendors. They will call your employees. You can expect to see articles citing 'sources close to the creditor committee.'
Address issues that are incorrect immediately. Go back to the list of advocates you developed before the filing and keep that database current. The key is not to let unsubstantiated rumors linger until they become toxic.
Tell your story everywhere: No, the press release and customer letter from your CEO is not enough. To reach all stakeholders, you need to employ an omnichannel approach. Think through every possible avenue to get your messaging about the progress of your restructuring journey across to all stakeholders.
Empathy beats buzzwords: The already jargon-heavy world of business communications can be mind-boggling for outsiders. Restructuring terms like 'debtor-in-possession financing' and 'stalking horse bidder' only add to the confusion.
Being human and empathetic sometimes takes a back seat during these stressful times and jargon-heavy bankruptcy headlines can sap the energy of employees who must continue to serve concerned customers.
Your employees are your most important allies on this journey, so the importance of showing humanity during these most difficult times cannot be stressed enough. Be authentic and save the jargon for bankruptcy filings and the courts.
Marc Drechsler is EVP of capital markets for Weber Shandwick.