Level Up: Communicating Through a Corporate Restructuring

  • On 02.02.2023
  • Categories:
  • General

By Harald Kinzler, James Melville-Ross and Ian Fox

Just before Thanksgiving last year, the owner of a furniture company in Ohio texted and emailed all of his almost 3,000 employees during the night, informing them that their services were no longer required and the company was going bankrupt. He then flew to Paris for a holiday. No one knew where he was, he did not return any calls, he did not respond to messages.

The impact was immediate: social media exploded with employee outrage, old-school media – from red-tops to financial outlets and platforms – picked up on it and had a field day. People were scathing, and rightly so. Irrespective of the operational and legal outcome of the bankruptcy, the reputational damage to the owner, his family and his company is irreparable. The event will become a case study at American business schools of how not to handle a crisis.

We will not examine the clearly very poor moral choices that were made, nor will we discuss the legal options that would have been available to the company. What we do argue, however, is that communications during such a crisis is absolutely crucial, can make or break corporate and personal reputations, reduce or intensify human suffering, facilitate or impair resolutions, limit monetary costs or cause them to skyrocket. How communications is conducted during a crisis – any crisis – is as important as the strategic, operational, financial and legal decisions made to resolve it.

Any formal corporate restructuring process is a crisis, and we will use the term ‘restructuring’ loosely to cover insolvency, bankruptcy or financial restructuring. Importantly, and helpfully, these legal processes are somewhat more predictable than many other types of crisis. Longer-term preparation is possible because, typically, restructurings can be seen weeks or even months ahead of time.

The challenge from a communications perspective in any crisis is that a wide range of interested parties need to be addressed as early as possible, at a time when many aspects of the process itself are subject to uncertainty, as is the ultimate outcome. This may in some cases be before a formal restructuring announcement is made, as rumours need to be addressed, worried employees reassured and business partners calmed down.

Communicating through a corporate restructuring

For practical communications purposes, we break a crisis down into three phases: preparation, navigation, and rebuilding. What does that mean in the context of a restructuring process?


This is the period before any restructuring announcement is made, and hopefully before rumours begin to emerge.

One of the few mitigating factors of a restructuring is that it does not typically happen overnight. The risk does not have to be identified first; it is clearly defined in advance and there usually is a run-up that allows the company to prepare behind the scenes. So even if no general crisis plans are in place, there is some time to catch up.

The first task will be to create response templates: what would our messaging have to be? Who would be the stakeholders we ought to communicate with? First and foremost, people. Employees, suppliers, customers, creditors, community leaders. There may be more. How would we reach them? What would be the questions each of these stakeholder groups is likely to pose, and how would we best answer them? What would be the conceivable scenarios once we have made an announcement, and how would we prepare for each one of them to ensure a suitable, timely response that aligns with the legal, financial, and business goals of the company?

In communications-advisor speak, this means creating a narrative, mapping stakeholders and communications channels, creating a Q&A, and all of that not just for the initial announcement, but also for all conceivable subsequent scenarios.

Timing also needs to be carefully considered in advance. For instance, which stakeholder group does the insolvency officeholder speak to first – employee representatives or senior company executives? The symbolism is important to get the right stakeholders on side at the right time.

Another example: it may be advisable, to the extent it is legally permissible, to get certain facts and decisions on the ground in place before an initial restructuring announcement is even made. Delays increase leak risks, yes, but may facilitate clearer communications. This is not the only time in a restructuring process when legal, operational, financial and communications decisions fuse.

By the way: there are leak risks every step of the way, starting before the initial announcement. A leak response that takes into account all conceivable scenarios has to be prepared, too.


Thorough preparation will stand the company in good stead to navigate the restructuring process, but it does not mean it can sit back and wait for things to unfold. The initial announcement is likely to trigger an intense phase of media queries and coverage, employee inquiries, and questioning by business partners and possibly local, regional and national politicians, among others. But even once this abates, there are many more reasons for flare-ups: with social media, the cycle never stops and all manner of rumours can proliferate at a moment’s notice. Moreover, by its very nature, a restructuring process is designed by legislators and regulators to be transparent. Therefore, each step will be visible to all stakeholders, and must be explained by the company. In order to keep messaging consistent, a disciplined internal coordination process needs to be in place between Management, Legal and Communications (and Investor Relations in case of a listed company) to prepare each piece of active company communications, and that picks up each piece of news/commentary/rumour, assesses it and responds to it with one voice.

In restructuring speak, this constitutes the stabilization, winding-down and liquidation phase: townhalls and individual conversations with employees happen, temporary salary and wage payment guarantees are put in place, negotiations with business partners are conducted, receivables are verified, liabilities are examined and creditors are kept up to speed with all of these workstreams. Needless to say, any one of them can erupt into a flurry of assertions, rumours and emotional outbreaks. In other words: it can lead to further and immediate demands on the communications work the company must do.

No restructuring process is entirely predictable, nor is the response to it by stakeholders. Companies need to constantly monitor the media cycle, respond to it, prepare for news announcements, adapt their messaging to changing scenarios, and cater to critical stakeholder groups. A painstaking, time- and resource-consuming process that requires discipline, attention, flexibility, speed, sound judgement, a reliable media network and creativity. Ultimately, the objective of this exercise is to preserve the credibility of the company and its management in order to facilitate the final phase of a restructuring process, the rebuilding of the company’s reputation.

At the end of this arduous process, remaining assets will have been liquefied and distributed to creditors. The financial transformation will be complete.


As the restructuring process ends, a new company emerges. That’s probably not going to be the view of all audiences, in particular of employees, but it is absolutely true from an external perspective. It is an opportunity to reset, to restart, to tell a new and different story. To signal this to the world, the communications approach has to change: messaging should highlight a more positive future, after a difficult recent past, and building on the successes of the pre-crisis era. The day-to-day work of the communications team is freed from regulatory and legal shackles to be more transparent, more cooperative, more active, in a sense more easy-going and optimistic, no longer encumbered by the difficult, grinding restructuring process. All audiences should notice the difference, not only in the narrative, but also in terms of the whole approach to communications. These audiences will be largely the same: nervous employees, cautious business partners, cynical media types, disappointed politicians, etc. It will take time and energy to establish a new narrative, to demonstrate a new approach, to rebuild credibility. You might as well start immediately, and energetically.

Importantly, lessons will have been learned and the next crisis is always just around the corner, even if it is unlikely to be another restructuring. So it is advisable to refine crisis communications plans while the memory is acute.

Give communications the attention it deserves

A restructuring process is difficult, highly technical, unsettling and unpleasant, and incomprehensible for most audiences. The risk is that company managements get bogged down in these technicalities and the sheer amount of work involved, and they forget, or at least neglect, communications. They shouldn’t: buried in all the intensity is hope and rebirth. Keeping audiences informed from the start, protecting management’s credibility, breaking through the incomprehensibility of it all, means keeping the faith of many if not all these audiences. Once the restructuring page is turned and a new chapter begins, an active, transparent approach to communications during the previous chapter makes the Rebuilding phase a lot less challenging. The more complex, unsettling and demanding a restructuring process, the more crucial it is to give communications the time and attention it deserves.

Harald Kinzler, Partner Financial Communications, DGA


James Melville-Ross, Partner Crisis Communications, DGA


Ian Fox, Partner Restructuring and Insolvency, Dentons


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