Stabilizing the Work Force and Controlling the Information Flow Are Key to Insuring "Business As Usual"

(TMA International Headquarters)

Public relations may seem to be an odd discipline to bring to a Chapter 11—unless you’ve been through one. "Business as usual" does not just happen. A great deal of work needs to be done to insure that your workforce is stabilized and the in­formation flow is controlled.

The days leading up to and immedi­ately after the filing are often the most important. Initial perceptions, more often than not, set the tone for the entire case.

Management must anticipate the concerns of all who will be affected—employees, vendors, suppliers, stakeholders and customers—and address them in an effective, credible and timely manner.

Each of the company’s constituents must be made to understand that Chapter 11 doesn’t mean the company is going out of business or that all of the company’s employees will lose their jobs. On the contrary, they must be told that daily operations will continue as usual, stores and factories will remain open and transactions which occur in the ordinary course of business will go on just as before.

Employees must be told that pay­checks will be issued at the same time as if no proceeding had been filed and that normal processing for ex­penses incurred will take place, with the exception of expense reimburse­ment to the highest paid employees, which would require court approval.

Customers must be assured that the company expects to be able to provide them with as good or better a selec­tion of goods and services as before.

Suppliers must be made to under­stand that though the Bankruptcy Code precludes payment for goods and services received prior to the date of filing, merchandise received post petition is given priority status by the court and that payment will be made for goods and services received after that date.

Shareholders and bondholders should be told what happened and why, what the filing means and what it doesn’t mean to them.

We’ve been involved in more than 30 restructurings both in and out of court over the past two years. Make no mistake about it. What you say, when you say it and how you say it, can and does make a difference.

Companies that have not properly prepared for filings have had em­ployees not show up for work, cus­tomers cancel orders and vendors refuse to ship. Those who were properly prepared, on the other hand, have had exactly the opposite experi­ence. In fact, one retail company we worked with recently had more than 85 percent of its vendors shipping on terms within a week of its filing.

Chapter 11 can be viewed as a new beginning or the end. How your company or your client’s company is perceived, is often dependent upon how its filing is positioned.