Corporate bankruptcy does not mean a brand will become extinct or that it’s time to halt all marketing and communications. Instead, a Chapter 11 filing is an opportunity for a business to restructure debt and remain in operation. A strategic approach to brand communications leading up to, during, and following a Chapter 11 filing is key to successful emergence.
The United States saw a 26% increase in Chapter 11 business bankruptcy filings, in the first half of 2020, according to legal-services firm Epiq. Many retailers, travel companies, and oil and gas companies were among the over 3,600 companies filing for bankruptcy protection, including Brooks Brothers, Ascena Retail Group (Ann Taylor and Lane Bryant), Hertz, 24 Hour Fitness, and Frontier Communications. In the coming months, there will likely be many more companies that are significantly impacted by the COVID-19 pandemic and changing consumer behavior, filing for bankruptcy protection.
However, Chapter 11 is not all doom and gloom. The objective is often to reorganize the business, not liquidate it entirely. A company going through Chapter 11 typically downsizes its operations. For example, many retailers who’ve announced Chapter 11 filing are closing down select stores and selling off certain brands.
There are many misconceptions about bankruptcy. Therefore, there’s a critical need to reassure a variety of audiences throughout the process. Brand communications play a vital role in sharing important information about the future of a business as it enters, manages through, and emerges from bankruptcy.
Here are several central pillars to effective brand communications in support of Chapter 11 filings.
Create a communications task force.
Internal alignment requires close coordination across leadership, legal, sales, marketing, and client-facing teams. Consider engaging outside communications counsel in the form of a specialized PR agency or consultant with relevant experience.
Craft the narrative.
The brand should own the present and future narrative. Don’t let others tell your story. Communicate new information along the restructuring journey to guide the media, partners, and customers regarding your transformation.
Find your allies.
Share and back up your story through parties who can support your communications, including analysts, influencers, partners, and ‘friendly’ reporters. Focus on the markets where you have a strong presence because of the vested interest in your future success.
Lean on leadership.
The CEO’s role is to set clear expectations and reassure customers, employees, and the general public. The top executive should focus on transparent and open communications that outline the organization’s future. Leadership can draw on brands who’ve successfully restructured and refocused their business.
There are typically many audiences who will be following Chapter 11 developments and information. Orchestrate consistent communications that mirror your filing but tailor these themes by the audience.
The Chapter 11 process is not a time to neglect your brand communications and marketing. Rather, it’s an opportunity to provide information reflective of the company’s new direction.