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Restructuring Communications In A Multi-Crisis Environment – Corporate and Company Law


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When the COVID-19 pandemic emerged as a serious challenge for
corporations at the start of 2020, it seemed as if the business
environment could hardly be more volatile. Yet nearly three years
later, COVID-19 is still present, and serious geopolitical tensions
with massive economic implications are contributing to even greater

This environment is already driving several German companies to
consider or initiate fundamental restructurings — with
experts anticipating many more to come. But unlike previous eras,
affected companies may find the process for reaching financial and
operational stability more complex and unpredictable. That’s
because a multitude of crises combined with ongoing issues from
before the pandemic are creating so much uncertainty.

Global Disruption of Supply, Demand and Financing

The war in Ukraine is disrupting businesses worldwide on
multiple fronts. In addition to affecting their ability to procure
and move goods along supply chains, the war is driving up prices
for raw materials and energy. The higher prices are squeezing the
margins of companies that are unable to pass the full increases on
to their customers. On top of this, inflation is broadly
escalating, weakening overall customer demand. A looming recession
in some of the world’s largest economies is further dampening
B2C and B2B demand.

Meanwhile, central banks are tightening monetary policy, driving
up interest rates and fundamentally changing the landscape for debt
financing. Financial investors as well as corporates within these
unsettled capital markets have become risk averse, limiting the
access to financing and the chances for divestments at reasonable
prices. Finally, companies that received state loans during the
pandemic will eventually have to repay them, thus reducing free
cash flows.

Ongoing Challenges Caused by Global Megatrends

A number of mid- to long-term issues that predate the pandemic
remain in critical need of being addressed more fully. One is the
move toward digitalisation, which affects the entire value chain
from production to retailing, putting companies under enormous
pressure to transform key aspects of their businesses. Another is
decarbonisation, a megatrend driving the need for significant
investments and realignments for sectors such as automotive, energy
and real estate. ESG and sustainability are also a focus, with
compliance expectations from investors to consumers to employees.
Lastly, corporations are challenged by the well-documented labour

A New Environment for Restructuring Communications

Companies will do everything in their power to adapt and survive
in this new environment, including drastic restructurings. Not only
is the number of restructurings likely to go up, but we can expect
individual cases to have a high degree of unpredictability due to
the crises and issues mentioned earlier. We’ll likely see
adjustments and readjustments of measures taken throughout the
restructuring process.

With all this uncertainty, company stakeholders will expect
timely and frequent reporting from management. This is where the
importance of a sound restructuring communications strategy comes
in. With proper execution, restructuring communications is designed
to build and maintain stakeholder confidence in the company and,
more specifically, in its leadership — even with limited
clarity on the outcome or timeline of the process.

Specifically, successful restructuring communications
demonstrates two qualities about the company’s top and upper
management that appeal to
stakeholders: competence and 
 to save the company. And the more
stakeholders are onboard, the more likely it is a company will be
able to enforce its restructuring plan — even against the
will of individual stakeholder groups when they are adversely
affected. That’s key, because sooner or later, groups who
feel they are losing out are likely to resist.

Answering Additional Challenges

Communicating throughout a restructuring process is always
challenging because a company must bridge two aspects that are hard
to reconcile. On the one hand, the need for information is immense:
Stakeholders are watching the company’s every move since they
have so much to lose — whether it’s jobs or revenues or
investments. On the other hand, precise outcomes and processes are
generally unsure, because it is often impossible to tell how
communication measures will work. The goal of restructuring
communications in this context, then, is to convince as many
stakeholders as possible — as thoroughly as possible —
on how things will turn out in the end without giving them definite

The way to manage this is to focus on the two qualities of
competence and commitment:

Competence is the ability to handle the
issue. A majority of key stakeholders must perceive that management
has the business and finance knowhow to lead the company out of the
current situation and into a better future. Essential for
demonstrating competence is to transparently outline not only the
overall short- and long-term challenges that led the company to
restructure, but also the risks for temporary disruptions that
might affect the turnaround.

Commitment is the willingness of
management to do everything possible to preserve the company and
position it for future growth and profitability. Once a majority of
stakeholders realise that management will give its all, it becomes
easier to create an understanding and acceptance of difficult and
unpopular decisions. To demonstrate commitment, it’s
essential to outline both the need for restructuring and a broad
action plan for doing so, and to keep all stakeholders updated on
progress toward saving the company.

It is vital for company executives to be consistently present
for stakeholders and to communicate the same set of messages.
Depending on the measures taken and the stakeholder group, middle
managers and team leads may need to be available as well.
Communications measures should include:

  • Precisely outlining the challenges and risk factors that the
    current environment imposes on the company, as well as goals and a
    clear action plan for reaching stakeholders even with adverse
    factors at play.

  • Regularly updating key stakeholder groups about measures that
    affect them (e.g., informing investors about debt reorganisations
    or employees about job cuts) while reiterating the goals and a
    broad action plan. This is not about sharing all information at the
    time it emerges, however. Rather, it is about balancing the
    trade-off between maintaining buy-in from stakeholders by letting
    them know where they stand and releasing premature information that
    could jeopardise trust.

  • Managing uncertainty in the process by being present for
    stakeholders. This means, for instance, showing up when
    stakeholders have pressing questions even when there are no
    clear-cut answers.


In such a turbulent macroeconomic and geopolitical environment,
we can expect an increase in restructuring cases. Moreover, we can
anticipate they will contain a high degree of uncertainty, with a
corresponding high demand from stakeholders for information and
communications. Now, more than ever, a sound restructuring
communications strategy — with competence and commitment at
its core — is key to retaining stakeholder buy-in and
confidence in company leadership to carry out its plan.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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