By Gordon Pennoyer and Andrew Wilson

If the recent uncertain economic climate continues, we could see a wave of bankruptcies and restructurings across the corporate landscape. Board and management shakeups, layoffs and investor losses would follow.

Restructurings are painful for all stakeholders involved. But, when the process is guided by a savvy communications and investor relations team who knows how the game is played, restructurings also provide a unique opportunity to help stakeholders align in a new reality.

Having seen these scenarios first-hand, we can offer five key tips to help a company thrive through a restructuring:

1. Get Smart and Be Ready – If you’ve never been through a restructuring, it will be critical for you to get smart on what is coming down the pike: build relationships with the lawyers, bankers and advisors and integrate yourself into their teams. Long before the filing day, you must build a communications playbook covering every scenario and stakeholder group. Remember, you know your company better than your outside advisors do and your voice will be critical in avoiding unforced errors as the process unfolds.

2. Enter Strong – There is only one chance to make a first impression, as the adage goes. The day a company announces its intention to file will be one of the most consequential in the career of a communications or IR professional. Failure to effectively frame the decision to key stakeholders will have a profound impact when the company reemerges. Be prepared for every scenario. The way you communicate and engage with stakeholders can help lay the foundation for the company to return to strong performance.

3. Embrace the Reality, Be the Truth Teller – When your company files for bankruptcy protection, your Board and Management teams lose control. The Court, and eventually the creditors, take over. It’s your job to give unvarnished advice based on your experience, and to drive a strategy firmly focused on the company’s opportunity when it emerges. The truth may be hard, as many companies do not emerge from bankruptcy at all, instead opting for liquidation or a merger. No matter the route, most companies that do emerge from a restructuring look very different. A bankruptcy is not the time for communications and IR professionals to offer lollipops and rainbows in the boardroom.

4. Be Employee Focused – Restructurings are traumatic events for employees, and how you communicate with them at the onset will have a significant impact on retention and performance. Employees need to clearly understand the “why” behind the decision to file as well as the path forward. Clearly communicate what it means for their jobs, compensation and benefits -- even if the likely outcome is negative.

5. Be a Hawk Externally – Few events garner more rumor and speculation from the press and investors than a restructuring. A company that successfully navigates the process will develop a narrative (that passes the smell test) and fiercely protect it. You need real-time monitoring and a team that can quickly engage with stakeholders when something is wrong or a question comes up.

No restructuring is easy. No bankruptcy is straightforward. Steady, clear communication with key stakeholders can help turn the corner and ensure employees, customers and other stakeholders have accurate, actionable information.

Gordon Pennoyer and Andrew Wilson are Managing Partners of DrivePath Advisors, a financial communications and investor relations firm. Gordon served as communications leader at Chesapeake Energy Corporation before, during and after their 2020 Chapter 11 filing. Andrew was external communications lead at Fannie Mae in the years following the 2008 financial crisis, and highly recommends not ending up owned by the government.

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