When Bankruptcy Goes Public

At the outset of the case, it is important to have an experienced communications team in place that will work in close coordination with the legal team. Don't wait until the situation “heats up” or for problems to arise to seek advice from professionals. Delaying gives others the opportunity to set the tone and drive media coverage and, in some cases, could make it more difficult to win approval for spending money on PR when the crisis peaks and such expertise is essential.

Announce Quickly

When you're in a position to announce news first, do it as soon as possible. Being proactive enables your side to get ahead of the story, to clearly explain the situation, communicate your point of view, prevent the spread of rumors and false information, and build relationships with the media. It also helps to garner important support from stakeholders that can “buy time” for decision making and prevent a cascade of negative events, such as the fleeing of customers, that could adversely affected the organization's ability to continue operating.

While attorneys and other experienced professionals certainly recognize that bankruptcy protection is, in certain cases, the most prudent course of action for a troubled organization, the very mention of the word “bankruptcy” can still create considerable fear and concern among those less familiar with the process. Employees will be anxious about their jobs. Customers will be concerned about what the filing means for the business. Creditors will wonder if they'll be paid. Regulators will want to be sure that the company continues to adhere to regulations and elected officials will wonder what the filing means for their community. And the media, of course, is among the most important vehicles for disseminating information that these various stakeholders will want and need on an ongoing basis.

Contact the Media

As soon as you are able to release information, contact the media. Don't wait for the news to “leak out” or for reporters — who, in some cases, may be stationed in the courthouse covering the case — to contact you, perhaps after they've already spoken to other parties. It's to your advantage to have reporters hear your point of view first and to make sure the information is conveyed as clearly and concisely as possible.

Make sure your announcement, press conference, and/or press releases avoid legalese or highly technical terms. Provide a clear explanation of events, using language that lay people will understand. Some reporters are more knowledgeable about legal and financial topics than others. Take the time to explain the information, provide additional background and answer questions. If you sense that the reporter has already received inaccurate information from other sources or is confused on a particular point, talk the reporter through the issue. Offer to provide relevant documents, additional background information or other sources to support your points.

Counteracting the Opposition

Be prepared to react quickly in the event other interested parties go to the media with a story of their own. For example, if the company is in tense contract negotiations with the head of a union, it's a good bet the union is thinking about how PR could be used to win support for its position. Anticipate how other parties could use communications as a tool and be ready to respond, even if a story is completely unexpected.

While some attorneys fear that anything their clients say on the issue presents potential legal jeopardy, there is almost always a way better way to respond than “no comment.” Particularly in high-stakes bankruptcy situations, the appearance of hiding by refusing to comment or being unresponsive can have significant repercussions

Experienced communications professionals and savvy attorneys recognize that there are ways of interacting with the media, even in very sensitive and fluid situations, without posing unnecessary risks to their clients. Responding to a reporter need not be akin to submitting to a deposition. While most reporters prefer to conduct interviews directly, it's not a requirement and prepared statements can serve as an alternative. Even direct conversations can be tightly scripted in a way that allows you to stay on message and get your point across without being drawn into areas you would prefer not to discuss.

Timing Is Everything

In every aspect of the process, it's important to be mindful of timing. The news cycle waits for no one. If the media calls, return the call promptly, as reporters work on tight deadlines. Taking even just a few hours to respond risks having a story appear without your input. If the story is one-sided or inaccurate, your client will be in the position of having to overcome it.

Dealing with Inaccuracies

While an unfavorable story can never be completely erased, there are things you can do to prevent the situation from getting any worse. If certain facts are wrong, it's worth pointing out the errors to the reporter. Be patient and resist the temptation to be confrontational, no matter how upset you are or how bad the story. Explain the issue and why it's important. Even if problems with the story fall short of warranting an official correction, the reporter will, at the very least, have the correct information, which could be important for future coverage. The conversation could also give you the opportunity to suggest a follow-up story that presents a slightly different angle.

In the case of very damaging coverage, however, dealing with the media aspect alone might not be enough. Direct communication with stakeholders, while important to conduct throughout the bankruptcy process as part of the overall strategy, is particularly important in the wake of unfavorable coverage. This type of communication could come in a variety of forms – personal phone calls, letters, e-mail — but should be delivered as soon as possible to set the record straight.

Conclusion

Particularly in the wake of the high-profile corporate implosions witnessed in recent years, events in bankruptcies and restructurings are increasingly being played out in the court of public opinion. A steady flow of accurate information coming from an organization navigating the process inspires confidence, reduces the potential for inaccurate information to spread and, perhaps most importantly, can help to build support for difficult decisions that inevitably must be made in such situations. Implementing a strategy at the beginning of the case that results in early, frequent and effective communication with the media and key stakeholders can be essential in supporting the needs of the legal team during the process and the organization as it looks to the future.

Bankruptcy filings make headlines, regardless of whether the debtor is a large public company, a small private business, a national icon or a local not-for-profit. And media coverage — and the public and political scrutiny it invites – can influence, for better or worse, the course of the case. It can even affect the very future of the organization. As the legal, operational and financial strategies associated with the bankruptcy process are put in place, communications must be an integral component.

Dealing with the Media

The first step in the process is to be prepared. From the days in advance of the filing to confirmation of the reorganization plan, anticipate that the case will make news. Whether the coverage relates to routine court procedures or larger events, such as union negotiations, layoffs or plant closures, the story likely will move forward with or without your involvement, so it's wise to get a handle on it well in advance.

At the outset of the case, it is important to have an experienced communications team in place that will work in close coordination with the legal team. Don't wait until the situation “heats up” or for problems to arise to seek advice from professionals. Delaying gives others the opportunity to set the tone and drive media coverage and, in some cases, could make it more difficult to win approval for spending money on PR when the crisis peaks and such expertise is essential.

Announce Quickly

When you're in a position to announce news first, do it as soon as possible. Being proactive enables your side to get ahead of the story, to clearly explain the situation, communicate your point of view, prevent the spread of rumors and false information, and build relationships with the media. It also helps to garner important support from stakeholders that can “buy time” for decision making and prevent a cascade of negative events, such as the fleeing of customers, that could adversely affected the organization's ability to continue operating.

While attorneys and other experienced professionals certainly recognize that bankruptcy protection is, in certain cases, the most prudent course of action for a troubled organization, the very mention of the word “bankruptcy” can still create considerable fear and concern among those less familiar with the process. Employees will be anxious about their jobs. Customers will be concerned about what the filing means for the business. Creditors will wonder if they'll be paid. Regulators will want to be sure that the company continues to adhere to regulations and elected officials will wonder what the filing means for their community. And the media, of course, is among the most important vehicles for disseminating information that these various stakeholders will want and need on an ongoing basis.

Contact the Media

As soon as you are able to release information, contact the media. Don't wait for the news to “leak out” or for reporters — who, in some cases, may be stationed in the courthouse covering the case — to contact you, perhaps after they've already spoken to other parties. It's to your advantage to have reporters hear your point of view first and to make sure the information is conveyed as clearly and concisely as possible.

Make sure your announcement, press conference, and/or press releases avoid legalese or highly technical terms. Provide a clear explanation of events, using language that lay people will understand. Some reporters are more knowledgeable about legal and financial topics than others. Take the time to explain the information, provide additional background and answer questions. If you sense that the reporter has already received inaccurate information from other sources or is confused on a particular point, talk the reporter through the issue. Offer to provide relevant documents, additional background information or other sources to support your points.

Counteracting the Opposition

Be prepared to react quickly in the event other interested parties go to the media with a story of their own. For example, if the company is in tense contract negotiations with the head of a union, it's a good bet the union is thinking about how PR could be used to win support for its position. Anticipate how other parties could use communications as a tool and be ready to respond, even if a story is completely unexpected.

While some attorneys fear that anything their clients say on the issue presents potential legal jeopardy, there is almost always a way better way to respond than “no comment.” Particularly in high-stakes bankruptcy situations, the appearance of hiding by refusing to comment or being unresponsive can have significant repercussions

Experienced communications professionals and savvy attorneys recognize that there are ways of interacting with the media, even in very sensitive and fluid situations, without posing unnecessary risks to their clients. Responding to a reporter need not be akin to submitting to a deposition. While most reporters prefer to conduct interviews directly, it's not a requirement and prepared statements can serve as an alternative. Even direct conversations can be tightly scripted in a way that allows you to stay on message and get your point across without being drawn into areas you would prefer not to discuss.

Timing Is Everything

In every aspect of the process, it's important to be mindful of timing. The news cycle waits for no one. If the media calls, return the call promptly, as reporters work on tight deadlines. Taking even just a few hours to respond risks having a story appear without your input. If the story is one-sided or inaccurate, your client will be in the position of having to overcome it.

Dealing with Inaccuracies

While an unfavorable story can never be completely erased, there are things you can do to prevent the situation from getting any worse. If certain facts are wrong, it's worth pointing out the errors to the reporter. Be patient and resist the temptation to be confrontational, no matter how upset you are or how bad the story. Explain the issue and why it's important. Even if problems with the story fall short of warranting an official correction, the reporter will, at the very least, have the correct information, which could be important for future coverage. The conversation could also give you the opportunity to suggest a follow-up story that presents a slightly different angle.

In the case of very damaging coverage, however, dealing with the media aspect alone might not be enough. Direct communication with stakeholders, while important to conduct throughout the bankruptcy process as part of the overall strategy, is particularly important in the wake of unfavorable coverage. This type of communication could come in a variety of forms – personal phone calls, letters, e-mail — but should be delivered as soon as possible to set the record straight.

Conclusion

Particularly in the wake of the high-profile corporate implosions witnessed in recent years, events in bankruptcies and restructurings are increasingly being played out in the court of public opinion. A steady flow of accurate information coming from an organization navigating the process inspires confidence, reduces the potential for inaccurate information to spread and, perhaps most importantly, can help to build support for difficult decisions that inevitably must be made in such situations. Implementing a strategy at the beginning of the case that results in early, frequent and effective communication with the media and key stakeholders can be essential in supporting the needs of the legal team during the process and the organization as it looks to the future.