Bankruptcy
Litigation, Crisis and Regulatory Communications Strategies for the Defense
High Stakes™ provides best practices for communicating on the most critical corporate, legal, and international issues of the day.
THIS ISSUE: BANKRUPTCY
Contrary to what many might think, bankruptcy and insolvency need not be death sentences for companies. Quite to the contrary, they often present opportunities for companies to forge a future vision that employees, investors, analysts, and consumers can share and support.
In this issue, we examine communications strategies to help navigate the eye of the bankruptcy storm…gain insight from the lead of the PricewaterhouseCoopers U.S. Restructuring Advisory Services…take a look at the high-authority blogs covering bankruptcy issues…and explore multiple opportunities for companies that successfully and credibly restructure for the future.
High Stakes™ provides best practices for communicating on the most critical corporate, legal, and international issues of the day.
THIS ISSUE: BANKRUPTCY
Contrary to what many might think, bankruptcy and insolvency need not be death sentences for companies. Quite to the contrary, they often present opportunities for companies to forge a future vision that employees, investors, analysts, and consumers can share and support.
In this issue, we examine communications strategies to help navigate the eye of the bankruptcy storm…gain insight from the lead of the PricewaterhouseCoopers U.S. Restructuring Advisory Services…take a look at the high-authority blogs covering bankruptcy issues…and explore multiple opportunities for companies that successfully and credibly restructure for the future.
Strategies: Bankruptcy communications – perception is the name of the game
Companies that prevail post-bankruptcy do so by managing perceptions even as the process is just getting underway – and maintaining that commitment to communication throughout the bankruptcy process. They control the overarching narrative, develop the right themes and messages that their critical audiences need to hear, and thus give those stakeholders a powerful and direct interest in the survival and ultimate turnaround.
From the outset, managing communications before, during, and after bankruptcy is an uphill battle. You must:
- Be prepared with a crisis communications plan that will help guide the process and establish the broad parameters of how events will unfold.
- Drive the story you want to tell by defining an angle of public interest when the overall story itself is mainly dominated by procedural details.
- Find an alternative to the slow drip of bad news.
- Focus on the people (employees, shareholders, customers, and others) who are affected by this and, by so doing, evoke sympathy from the public at large.
- Effectively deflect adversaries’ attempts to derail your positive message.
- Get the bad news out, early and often. Such an approach may seem counterintuitive – and bit frightening – but it is a strategic approach that subsequently defines how the story is felt and seen by your critical audiences. If articulated shrewdly, bad news has a way of soon becoming old news. The hot anticipated story becomes one of impending recovery rather than imminent liquidation. The media will cheer a comeback if that comeback has real allure. Adversaries then have a much tougher time swimming upstream against the dominant new story line.
- Make the people who are often forgotten during bankruptcy proceedings – employees and customers – feel appreciated as key players in reversing the company’s fortunes. When executives make themselves available to such often key audiences, they send a critically supportive message and are themselves supported in turn. By doing so, you also create events that the media, Wall Street analysts, and other can focus on according to the company’s timeline. In other words, you seize control of the agenda.
- Determine your messages early on and stick with them throughout the bankruptcy lifecycle. The term of art is “reach and repetition.” At the same time, be sure to tailor every message for its intended audience – employees, customers, analysts, the media, and others.
- Talk about the errors of the past only if absolutely necessary. Emphasize instead the future promise.
- Enlist allies. Build relationships ahead of need with influential third-party supporters. Provide suggested points, offer their names to interested reporters, bloggers, and others, and secure appropriate publishing or interview opportunities. Remember, these independent supporters are putting their reputations on the line for you, so make their roles as safe and easy as possible.
Industry Insight: Cyrus Pardiwala, the lead of PricewaterhouseCoopers’ U.S. Restructuring Advisory Services
When prestigious companies are facing the prospect of bankruptcy, they turn to Cyrus Pardiwala – the lead of PricewaterhouseCoopers’ U.S. Restructuring Advisory Service – for the insights and expertise to survive the storm.
Here’s what Mr. Pardiwala had to say in an interview about the significant role strategic communications play in successful bankruptcy management.
What should companies confronting bankruptcy be saying to cement the perception that a comeback is imminent?
Cyrus Pardiwala: It is important to have a message out there that is credible and consistent both internally and externally. In this day and age, we work under the assumption that spin doesn’t work – stakeholders see through obfuscation and doublespeak.
Likewise, you can’t be disseminating different messages to different audiences. You can always tailor messages to particular stakeholders, but the messages must not be contradictory.
And, perhaps most important, your messages have to focus on the actions taken to give comfort to the various stakeholders who need to know that the process is under control. There has to be a plan and the aspects of that plan need to be clear as day. It is my experience that when distressed companies spend too much time trying to explain what happened or deflect responsibility, it doesn’t help. It only keeps the emphasis on the issues that led to the prospect of bankruptcy in the first place.
What are the dangers of failing to effectively communicate a credible and consistent message?
Cyrus Pardiwala: The most immediate danger is a far more difficult process for getting a plan of reorganization approved. If a company fails to get the message out or the message gets garbled, it creates a sense of uncertainty or lack of confidence that results in a much more difficult negotiation with all the various parties [with whom] the company needs to deal in getting a plan approved.
Your lenders, your creditors, your shareholders, your employees, your customers, and even your competition are all watching every move you make. With the exception of your competition, you will be depending upon a partnership of sorts with each of these audiences to get back on your feet. If you give them reason to believe in a comeback, you’ll find them much more amenable to your position. If you don’t, you create adversaries at a time when working together is of the utmost importance.
If I were the communications director of a company filing for bankruptcy, what would be the three most important things to remember moving forward?
Cyrus Pardiwala: First, be in control of the messaging. Get out in front of the story and stay in the lead.
Second, focus on the consistency and the credibility of your messaging.
And third, make the reorganization plan and its execution the central theme of the campaign.
For more insight from Cyrus and his team, subscribe to PricewaterhouseCoopers’ Phoenix Report by sending an e-mail to cyrus.pardiwala@us.pwc.com
Bloggers and Bankruptcy
Broadly, bloggers are emerging as the gatekeepers to the mainstream media and often break stories days before they reach the Wall Street Journal, Financial Times, or CNBC. Employees, customers, and shareholders likewise rely on the Web in forming opinions and perceptions that can sink or salvage a corporation in crisis.
Here’s a look at the top high-authority blogs covering bankruptcy issues today.
Bankruptcy Blog Exchange
http://blogs.abiworld.org
The posters of this top-line blog describe it as “all of the bankruptcy blogs in one location.” Indeed it is. Bankruptcy Blog Exchange collects nearly 25 of the top blogs focused on bankruptcy and related issues, harvesting commentary on both consumer and corporate bankruptcy.
In the Red: The Business Bankruptcy Blog
http://bankruptcy.cooley.com
From Cooley, Godward & Kronish LLP attorney Robert Eisenbach, this blog focuses on helping CEOs, CFOs, boards of directors, credit professionals, in-house counsel, and others stay informed about important business bankruptcy issues and developments.
The Bankruptcy Litigation Blog
http://www.bankruptcylitigationblog.com
The Coleman Law Firm’s blog covers all aspects of bankruptcy, including recent case law developments, the history of bankruptcy, and interesting bankruptcy news.
Bankruptcy and Restructuring Blog
http://www.bankruptcylawblog.com
Sheppard Mullin's blog provides “up-to-date information on bankruptcy, reorganization and creditor’s rights.” The blog covers issues related to Ninth Circuit case law updates, international insolvency, and nationally significant cases.
Insolvency Blog
http://insolvency.mercerhole.co.uk
This UK-based blog “features regularly updated information, comment, and ideas from Mercer & Hole's insolvency experts.” The blog covers topics ranging from asset-tracing to corporate restructuring to international insolvency, in the UK, across Europe, and beyond.
Announcing Making Your Point
Making Your Point, a new book by Levick Senior Vice President David Bartlett, examines the fundamental strategic considerations driving effective communications. It defines that key component called “emotional intelligence.” It provides the simple powerful tools to make a point in person, prepare and deliver effective speeches and presentations, get messages across in a media interview, and communicate during crises. Making Your Point is an easy-to-use communications guide for professionals and non-professionals alike. Order your copy today.>>
Broadly, bloggers are emerging as the gatekeepers to the mainstream media and often break stories days before they reach the Wall Street Journal, Financial Times, or CNBC. Employees, customers, and shareholders likewise rely on the Web in forming opinions and perceptions that can sink or salvage a corporation in crisis.
Here’s a look at the top high-authority blogs covering bankruptcy issues today.
Bankruptcy Blog Exchange
http://blogs.abiworld.org
The posters of this top-line blog describe it as “all of the bankruptcy blogs in one location.” Indeed it is. Bankruptcy Blog Exchange collects nearly 25 of the top blogs focused on bankruptcy and related issues, harvesting commentary on both consumer and corporate bankruptcy.
In the Red: The Business Bankruptcy Blog
http://bankruptcy.cooley.com
From Cooley, Godward & Kronish LLP attorney Robert Eisenbach, this blog focuses on helping CEOs, CFOs, boards of directors, credit professionals, in-house counsel, and others stay informed about important business bankruptcy issues and developments.
The Bankruptcy Litigation Blog
http://www.bankruptcylitigationblog.com
The Coleman Law Firm’s blog covers all aspects of bankruptcy, including recent case law developments, the history of bankruptcy, and interesting bankruptcy news.
Bankruptcy and Restructuring Blog
http://www.bankruptcylawblog.com
Sheppard Mullin's blog provides “up-to-date information on bankruptcy, reorganization and creditor’s rights.” The blog covers issues related to Ninth Circuit case law updates, international insolvency, and nationally significant cases.
Insolvency Blog
http://insolvency.mercerhole.co.uk
This UK-based blog “features regularly updated information, comment, and ideas from Mercer & Hole's insolvency experts.” The blog covers topics ranging from asset-tracing to corporate restructuring to international insolvency, in the UK, across Europe, and beyond.
Announcing Making Your Point
Making Your Point, a new book by Levick Senior Vice President David Bartlett, examines the fundamental strategic considerations driving effective communications. It defines that key component called “emotional intelligence.” It provides the simple powerful tools to make a point in person, prepare and deliver effective speeches and presentations, get messages across in a media interview, and communicate during crises. Making Your Point is an easy-to-use communications guide for professionals and non-professionals alike. Order your copy today.>>Announcing the Americas Restructuring and Insolvency Guide 2008 from PricewaterhouseCoopers & Morgan Stanley
If you find this issue of High Stakes useful as a guide to bankruptcy communications, turn to the Americas Restructuring and Insolvency Guide 2008, from PricewaterhouseCoopers and Morgan Stanley, for analysis and guidance on a broad range of related legal and business issues. Order your copy today.>>
If you find this issue of High Stakes useful as a guide to bankruptcy communications, turn to the Americas Restructuring and Insolvency Guide 2008, from PricewaterhouseCoopers and Morgan Stanley, for analysis and guidance on a broad range of related legal and business issues. Order your copy today.>>
Stop the Presses
Stop the Presses: The Crisis and Litigation PR Desk Reference – now in its second edition – is a survival manual for corporate leaders, board members, lawyers, and communications specialists. This book provides the dos and don’ts of crisis planning and communications and articulates the essential strategic guidelines for navigating myriad bet-the-company issues. Order your copy today.>>
Stop the Presses: The Crisis and Litigation PR Desk Reference – now in its second edition – is a survival manual for corporate leaders, board members, lawyers, and communications specialists. This book provides the dos and don’ts of crisis planning and communications and articulates the essential strategic guidelines for navigating myriad bet-the-company issues. Order your copy today.>>What’s Next
The dominant message in most successful bankruptcy communications campaigns – that a “new day has dawned” – is, by definition, all about the long term. As such, the public outreach is also a long-term proposition, continuously reaffirming corporate recovery throughout the months and even years ahead. For example:
Future High Stakes ™ issues
Data loss and theft:
The number of companies and institutions affected is staggering. How will you respond to the crisis that may likely lie ahead?
Foreign Corrupt Practices Act:
Enforcement actions under the FCPA doubled between 2006 and 2007. Here’s how to limit liability and demonstrate full compliance.
The energy industry:
After a summer in which skyrocketing energy prices are sure to roil global markets, we’ll examine the steps this industry under fire can take to respond.
More to come:
• Accidents and Disasters
• Antitrust
• Board or Board Member Liability
• Class Actions
• Coming to America
• Diversity
• Education
• Executives Behind Bars
• Food
• Global Capital Markets
• Intellectual Property
• Internal Communications
• Internal Investigations
• Labor & Employment
• Monetizing Moments
• Money Laundering/Money Transfers
• New Media/Social Networking
• Product Liability
• Professional Services Crises
• Public Equity
• Whistleblowers
• Reputation Management – Celebrity
• Reputation Management – Corruption
• Reputation Management – SEC Investigations
• Tourism
• Trade
Next month’s focus: DATA LOSS AND THEFT
The dominant message in most successful bankruptcy communications campaigns – that a “new day has dawned” – is, by definition, all about the long term. As such, the public outreach is also a long-term proposition, continuously reaffirming corporate recovery throughout the months and even years ahead. For example:
- Define the new order. Are there new executives at the helm, new products in the pipeline, and/or new acquisition targets that prove this company has advanced far beyond the same bankrupt company that made bad news in the past? Americans love the notion of being “reborn.” That love can extend to corporations as well as movie stars or politicians.
- Promote the company’s vision for the future as if it were a product launch. Create opportunities for the CEO and other top executives to talk about where the corporation is headed, and how that new direction will benefit all the parties involved. Hold town hall meetings with investors and organize an online Q&A session with consumers, for example. Such events provide opportunities to share key messages with captive audiences in a media-friendly setting.
- Stand for something that may directly address the very problems that put the company in jeopardy. For JetBlue in early 2007, in its non-bankruptcy crisis, that meant a Passengers’ Bill of Rights. For lenders hit hardest in the sub-prime meltdown, it is helping families continue to realize the dream of homeownership. Companies entering and then emerging from Chapter 11 can likewise provide wary consumers, cautious investors, and skeptical analysts with something to fight for that’s larger than the company itself.
Future High Stakes ™ issues
Data loss and theft:
The number of companies and institutions affected is staggering. How will you respond to the crisis that may likely lie ahead?
Foreign Corrupt Practices Act:
Enforcement actions under the FCPA doubled between 2006 and 2007. Here’s how to limit liability and demonstrate full compliance.
The energy industry:
After a summer in which skyrocketing energy prices are sure to roil global markets, we’ll examine the steps this industry under fire can take to respond.
More to come:
• Accidents and Disasters
• Antitrust
• Board or Board Member Liability
• Class Actions
• Coming to America
• Diversity
• Education
• Executives Behind Bars
• Food
• Global Capital Markets
• Intellectual Property
• Internal Communications
• Internal Investigations
• Labor & Employment
• Monetizing Moments
• Money Laundering/Money Transfers
• New Media/Social Networking
• Product Liability
• Professional Services Crises
• Public Equity
• Whistleblowers
• Reputation Management – Celebrity
• Reputation Management – Corruption
• Reputation Management – SEC Investigations
• Tourism
• Trade
Next month’s focus: DATA LOSS AND THEFT