Restructure This! Podcast Ep. 6
Communicating Distress in the Digital Era
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Listen to the original podcast released March 9, 2022 here:
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The ways that companies connect with their stakeholders has dramatically changed with the rise of digital and social media and a challenge to the concept of shareholder privacy. We speak with Sydney Isaacs and Dan Scorpio of Abernathy MacGregor on how companies can effectively reach their customers, vendors and employees during times of uncertainty such as a corporate restructuring.
Guests:
Our guests are Sydney Isaacs and Dan Scorpio of Abernathy MacGregor. With over 17 years at Abernathy, Sydney advises companies on transactions, crises and other times of transition, including restructuring. Dan, who joined Abernathy in 2015, is the head of M&A and activism.
Transcript:
Justin Bernbrock:
Greetings, welcome to Restructure This. The Sheppard Mullin podcast is devoted to corporate restructuring, where we discuss complex chapter 11 practice, out of court restructurings and workouts, as well as other topics related to financial distress. I'm your host, Justin Bernbrock. Let's restructure this.
Justin Bernbrock:
On today's installment of Restructure This, we welcome Sydney Isaacs and Dan Scorpio of Abernathy McGregor. Sydney's the managing director and the head of Abernathy's Houston office. She advises companies on transactions, crises, and other times of transition, including during financial restructurings.
Justin Bernbrock:
Dan is also a managing director at Abernathy and is the head of M&A and activism. Dan provides communications, stakeholder engagement and reputation management council to management teams and boards during chapter 11 cases and other situations. Today, Sydney and Dan will discuss how the communications landscape has changed in recent years with the rise of digital and social media and what it means for how companies can effectively reach and persuade key stakeholders during times of uncertainty. As always stay tuned after the interview for a quick rundown of current restructuring news and notable stories.
Justin Bernbrock:
As I mentioned today, we're joined by Dan Scorpio and Sydney Isaacs of Abernathy McGregor. Dan, Sidney, thank you. It's great to have you on today. We really appreciate your spending time with us. So before we kick off with the actual interview, I certainly would find it helpful if the two of you would spend some time talking about your background, talking about how you got to where you are now at Abernathy and even just sort of, for those who aren't familiar with Abernathy, the firm, the background of the firm. How it came to be, and sort of its specialties. Sydney, would you mind kicking us off?
Sydney Isaacs:
Sure. I'll give some quick introduction to the firm and then turn it over to Dan. We appreciate being here with you all, and I've always enjoyed working with the Shepherd team. So to get the chance to talk about some of what we do. My name is Sydney Isaacs, I'm a managing director and I lead our work in Houston. I've been at Abernathy for about 17 years.
Sydney Isaacs:
My practice is largely transactional. So working with companies during mergers, acquisitions, IPOs, and of course, bankruptcies and restructurings. I'll give just a short introduction to the firm that is about 35 years old, based in New York. Started really as an investor relations firm and over the years has expanded into adjacencies. So we're probably best known now for working with companies during times of change. So that's mergers, acquisitions, crisis management changes, proxy fights and bankruptcies, those types of things. But I'll turn to Dan for more color on Abernathy and to introduce himself.
Dan Scorpio:
Thanks Sydney. And thanks Justin for having us on the podcast fit. Great experiences working with the Sheppard Mullin team. So it's great to be here. And as Sydney mentioned, our firm Abernathy McGregor is a communications firm that specializes in complex and high profile special situations. So companies and boards call us to help them through the moments that matter most, that's to protect their reputation, help preserve valuation during times of change, such as high profile mergers, shareholder engagement, restructuring, and bankruptcies and litigation. I've been with the firm now for about eight years. I have a journalism background and I lead our team here in Chicago.
Justin Bernbrock:
Excellent. Well, thank you both. I know from the restructuring lawyer perspective and having done a number of debtor cases, it is very, very helpful, the work that you all do. And so I don't think enough can be said about how valuable it really is. But let's deconstruct the situation a bit, and we'll start from the word go. And you get a call from a company, a board, perhaps even another advisor or council. And they say, "We've got this impending situation or this impending event. And we're a public facing business. We have significant interactions with the public. And so we know that the message regarding this near term event is important and we want it told properly." What is step one for the communications team. What are you actually doing behind the scenes? And how does that unfold?
Sydney Isaacs:
Yeah, I can take that one, Justin. I'll start by kind of painting two scenarios. And that'll give you a good sense of the role that communications plays in a restructuring. So the first scenario is this: they've got an employee driving to work, listening to NPR, and hears on the radio that her company's filed for bankruptcy. And there's lots of complicated words and it sounds scary.
Sydney Isaacs:
And she gets to work and everybody's kind of congregating outside and chatting about what this could mean. And there's a little panic starting to set in. And then the reporter shows up and starts interviewing employees. None of whom really know what's going on. Then switching to a second scenario the employee knows that the company's evaluating some different options. And the CEO calls a meeting and walks the employees through a plan that's going to finally get the company where it needs to be to accomplish the goals that they really want to accomplish, but that hasn't been possible with the debt level that they've been operating with.
Sydney Isaacs:
So in the meeting, the CEO explains that this is a really orderly process and we're going to get access to new capital. And in order to accomplish that, we're going to ask the court to oversee a chapter 11 restructuring process. And then the employee goes back to her desk and there's an email and her inbox reiterating that same stuff. And then her boss calls a meeting and she reinforces that same information again, everybody looks pretty calm. She's taking cues from her boss who looks pretty collected, not panicking. So you can see the difference in the two scenarios. And that illustrates the role of communications. And back to your original question of what do we actually do? First and foremost, it's about the message. So in the first scenario, the message was bankruptcy.
Sydney Isaacs:
And in the second message, it was an orderly process to untie our hands and let us do what we really want to do and refocusing people's attention on some of the positives. And I also want to emphasize, in addition to the message itself, I mentioned some of the body language, that people appear calm and collected and positive. And those unstated cues matter just as much as the stated ones. So we start with what's the right message? What story are you trying to tell? And then the second is tactics, which also came up in that example of the two scenarios and how do we reach people? And I emphasize employees, but the same story is relevant for customers and vendors and politicians and regulators, and how do we reach them as directly as possible. So we're really eliminating that grapevine.
Sydney Isaacs:
And it sounds simple enough, but I'll tell you a story of one of our clients that's in the offshore drilling space and they work around the clock shifts. No one's sitting at a computer, nobody gets emails. They speak lots of different languages. They have employees all over the globe. So how do you reach those people all at the exact same time with the same message, that's really going to resonate. So there's a lot of tactical considerations that go into the planning. And then the third area I would mention is media relations. So we obviously want the media to reflect our key messages, and there's several ways that we can do that, which we're going to talk about in a little bit. But engaging with reporters in both the pre-petition and post-petition period is really critical on the communications front as well.
Dan Scorpio:
And I would add to that in addition to the go moment that you asked about. It's really essential for companies to manage all of the milestones along the way, during a chapter 11 process. Those of us who are really steeped in the details know that first filing is not the end of the process. In many ways, it's the beginning or the beginning of a new process. But our clients, employees, customers, people in the community, they may not know that.
Dan Scorpio:
And headlines in the media about lender negotiations, petition details, motions, all of that can cause angst or uncertainty among those really important groups for the company, even though they may really just be normal course events through the process. So our role is to play quarterback for the company through these pre-and post-petition dates, helping minimize any disruption among these groups and ensuring that all of these groups have confidence in the company's future going forward to manage through the chapter 11 process.
Justin Bernbrock:
Yeah, I can think of several instances in my own experience where a story broke about a company and that started to cause vendors and customers who may have been at the periphery of the restructuring dynamic. It's probably less likely that lenders and banks and bond holders that are close to a restructuring situation to actually learn of news through the media, because they tend to be involved in the discussion from an early stage.
Justin Bernbrock:
But vendors, particularly those not situated in the United States, when they see something and they tighten trade and credit terms, it can have a real impact and a real accelerant effect on a company's restructuring situation. So it's definitely a factor to consider early, early on, as you both mentioned. I know something that's always been a little bit of a mystery, in the positive sense, we'll call it mysterious. But it's just engagement with the press and what does it mean to talk in the background versus a no name source versus full attribution?
Justin Bernbrock:
I generally understand those things, but engagement with the press, perhaps even speaking the press lingo, I know is something that you all specialize in. So what should we know and what should folks facing any restructuring situations know in respect of just engagement or relating to the press.
Dan Scorpio:
So Justin, this can be a frightening or overwhelming topic for many companies going through a restructuring. I can't tell you the amount of times that we get a phone call saying, "The Wall Street Journal just called us, what do we do?" And in many situations, an initial instinct is to shut down and not engage and sort of retreat to our corners and just wait for the storm to pass on this. In our view, there are really two important ideas that guide our conversations with advisor and clients about media.
Dan Scorpio:
First is that we believe strongly that it's better to have a working relationship with the reporters and editors covering your company than it is to completely ignore them. And this is for several important reasons. Doing so, in our view, leads to coverage that is more accurate, more informed, and actually can give you good intelligence about what is going on in the market that helps you make decisions. But really important is that you have to do it the right way. And I'll get into that in just a minute.
Dan Scorpio:
The second piece is it's important for folks to know that engaging with the media does not automatically mean that we're going to give a quote or a full interview with the company CEO to a reporter. There's a lot that happens behind the scenes that leads to what you read in the paper each morning, or on the Bloomberg terminal at your desk. And to be honest, over the last five years, I can likely count on one hand the number of times we recommended a client CEO given on the record interview with the media during a restructuring process. But the flip side is true in that during a chapter 11 process, our team spends hours on the phone with the media making sure the coverage is positive, it's accurate and complete as we can. So the next question we all always get is, so how do we do that?
Dan Scorpio:
And an important piece here is that it's incredibly essential to set and agree on ground rules before you get on the phone with a reporter. We've had many experiences where someone tried to call a reporter and get right into the facts without setting ground rules. And it's very difficult to put the toothpaste back in the tube once you've gone down that road.
Dan Scorpio:
So to your question about on the record off the record, on background, how do you engage in these aspects? On the record means that everything you say can be used. This is how people are quoted in articles, but we actually use this fairly rarely in a restructuring because it's such a controlled legal process that we try to design the quotes in a press release for example, as are on the record statements for press. We try to control the process and match what is happening in court or through the filing process so that everything is in sync.
Dan Scorpio:
Off the record means that nothing you say can be used. We actually use this less frequently than people think. You often will see in a movie about journalism and everybody is off the record. And it's very dramatic. But that's not really how we use it because that means that nothing actually can be used, which in some ways takes away the point of why we're trying to talk to a reporter. But we do use off the record if a reporter has something wrong, if information is really sensitive or if something that could be published would be damaging to the company and we need to stop that.
Dan Scorpio:
One example that happens all the time and just happened to us recently, a reporter called saying that he had heard a rumor about our clients that the company was close to filing for bankruptcy. Now that wasn't true, but the company was exploring certain financing options where actually market speculation or a news article about a bankruptcy would've hurt their position in that process.
Dan Scorpio:
So we went off the record, tell the reporter that the information was inaccurate, that he would have to file a public correction if he published it, which reporters hate to do. And that shut down the story. And that was a really important tool to be able to have in the toolbox for our clients.
Dan Scorpio:
Most often in our restructuring, we talk to the media in this world of background. And so we do that so information or context appears in an article because it's important to our company or the process, but no one is actually quoted. We often work with outside counsel to do this. And think if you are in a process with a company where you need to explain the details of a complex financing arrangement, or maybe about a legal precedent on a specific issue, that's when we would talk in background with a reporter to ensure the story is accurate and complete.
Dan Scorpio:
We also try to do this to influence coverage that can appear to be in our client's point of view and more favorable. Work behind the scenes to do that. Bottom line here is that the media can be your friend, but it also can be your foe. You really have to know how to do it.
Sydney Isaacs:
The other tactic that you might hear about in media relations is what we call an exclusive or an embargo. This is something that we use not infrequently in bankruptcy in particular. This is when you have an announcement that's getting ready to go out and maybe there's some sensitivity or complexity that might not initially come through without a little bit of explanation.
Sydney Isaacs:
We know that when the announcement goes out, reporters are going to try to file their stories immediately. So the stories that you get in the first few minutes after the filing are pulled straight from the wire. So it's a few sentences, not a lot of context, just trying to get the news out there because reporters are really incentivized on speed. So oftentimes it's in our best interests, our client's best interests if the first story that hits really has some... It's more fulsome, that it's got context and it explains some of the complexity and it explains some of the sensitive topics.
Sydney Isaacs:
So what we'll do is go to the reporter and say we're going to put out a press release at 4:00 PM for an unnamed client related to a restructuring. We will give you the press release 30 minutes in advance and talk with you on the phone to go through some of the key issues on background if you agree to not push your story out until 3:59, because we're going to put our news out on the wire at 4:00. And this allows us to talk through the issues with the reporter and really explain the situation so that the first story that hits and that's really going to drive the tone of additional coverage and drive understanding of your different stakeholders is really comprehensive and ideally includes some of our messages.
Sydney Isaacs:
So I'll tell you a short story. One of our clients is in the oil and gas industry and they have a lot of operations in California. And there was a lot of concern that if our politicians and regulators in California see a headline that says company X files for bankruptcy, that the concern will be what happens to their environmental liabilities. They're plugging and abandonment requirements and stuff that they might choose to try to dismiss through the bankruptcy system.
Sydney Isaacs:
We wanted to reassure all of our stakeholders that we were committed to those environmental obligations and that they didn't have to worry about our commitment to the community. So we reached out to Bloomberg in advance, we shared the press release about our filing, but also talked them through some of those key points. So that was the first story that hit, yes to talk about, we were doing this restructuring process, but it also had some of the additional language that would be really useful for the regulators and politicians and others to see minute one.
Sydney Isaacs:
So that's just an example of another media relations tactic, but to Dan's point I always tell people don't try this at home. It's something that we do when we have strong relationships with the reporter, we've built that level of trust and we know how to approach them with the appropriate ground rules. So that again, to Dan's point, you don't say "Here's all this information, oh wait, by the way, that's off the record." Because clearly that's not how it works and that's not going to work. So there's a lot of what I call kind of ninja media relations that can be extremely useful in a filing and in other situations as well. But you do kind of need to know what you're doing otherwise it does carry some risk.
Justin Bernbrock:
That's good advice for most things.
Sydney Isaacs:
I agree.
Justin Bernbrock:
But we hear a lot about leaks and news or stories fed to journalists through sources. Can you talk a bit about that world? And I get the sense that there are a few different types, perhaps those that are purposeful and those that are not.
Dan Scorpio:
And I can tell you Justin, from being in many transactions or restructuring war rooms with companies and other advisors, everybody's favorite parlor game is trying to figure out where media leaks came from. Leaks drive everybody crazy. And they seem to happen at the worst possible time. And so it's important to remember though that companies going through a high profile situation and the media covering these companies have different goals.
Dan Scorpio:
So reporters are compensated to break news. It truly is their job to publish these kinds of stories. And for companies, for our clients, they want to have as much control for as long as possible through their situation. So sometimes these goals can be conflicting and sometimes as they come to a head. What's important for companies is that they're prepared to manage through it. And you asked a really good question about two different types of leaks. And you're exactly right.
Dan Scorpio:
Sometimes you will see parties in a process, using a leak to the media to try to advance their negotiating position, for example. Or they may try to test out to the market, test the market reaction about a specific transaction structure or pricing and can use a positive or negative market reaction to their advantage.
Dan Scorpio:
But another aspect of it is that sometimes leaks just happen. Reporters are good at their jobs. They know how to ask the right questions. They know who to ask. They know how to, in a sense, trick you into divulging information that you may not want to. And they understand how to read body language and pauses on the phone and certain emphasis in responses to get the information that they need. And then they know how to use that advantage to their advantage with somebody else.
Dan Scorpio:
So sometimes you see a leak in a story in the newspaper, and everybody wants to go and figure out where it came from. And sometimes the answer is just as simple as the reporter was really good at doing his or her job to find that information. But one other piece that we think is important because we found that we were getting lots and lots of questions from our clients about leaks. And so we did some digging and some data analysis to try to get some answers that could help with how we talked to clients about this.
Dan Scorpio:
And so we built a database that looked at leaks and media coverage and found two key facts that are really important. The first is that for most companies, a leak to the media about their transaction, about their restructuring, about possible litigation, a big moment like that often makes up the highest volume of media coverage that these companies have seen in years.
Dan Scorpio:
It's a big moment, lots of attention, very high profile, so they need to handle it the right way. The second and corollary piece is that after a leak has happened, when we looked at the numbers and analyzed what media coverage looked like, coverage of a company's official announcement, post-leak, trailed off considerably. So that means that companies work hard on their announcement plan. They get the right messages, they build everything that Sydney talked about upfront about how to reach different stakeholder groups at the right time with the right messages.
Dan Scorpio:
And if your transaction, if your restructuring process has leaked, by the time you get to the point when it's time for all of that work to pay off, no one is paying attention to what you have to say because they paid attention to the leak. So the lesson, as we see it for companies here is you really have to be prepared with your messages, with your plan and your response, so that if a leak happens, the public narrative about your company and your high profile moment doesn't happen without you.
Justin Bernbrock:
Got it. Those are good lessons to live by, for sure. So let's change gears a bit and focus more internally at a distressed company, particularly one that has a sizable employee population. And what advice and recommendations can you provide or examples or stories regarding a company's sort of management of the internal message.
Sydney Isaacs:
Yeah, Justin that's really, I would say the biggest change that I've seen in my career has been the way that companies engage with employees. Especially in the last several years. And in the olden days, I'll call it. When we had a big announcement, it was very top down. So you have a press release and that's kind of your megaphone and you put out the news and it's a one way channel. You're just pushing out the information and it's not particularly customized by audience.
Sydney Isaacs:
It's just one big splash. Now there's a lot of different types of tools that allow for a two way dialogue and not just allow for it but employees now have an expectation in particular that the company will give them a way to have a two-way dialogue. So employees want to have a voice, and if you don't give them a way to express their views, they're going to find it on their own.
Sydney Isaacs:
So it's a lot less pretty for the company, if employees go to the media because they don't feel like they're being heard internally, if they go to social media. So if we can provide an outlet for them to feel like they have a way of expressing their opinions, that contains some of the dialogue internal to the company, which is really beneficial.
Sydney Isaacs:
Employees also really, they don't leave their personal views at the doorstep anymore. It used to be, you show up to work, you do good work and you go home. Now, the workplace has become a lot more of a center where people want to see their values reflected. And it's a challenge for companies that have historically been a little bit more stoic or objective. And now they're being asked to represent the views of their employees more directly.
Sydney Isaacs:
So for example, when you have a big, an announcement, say it's a restructuring bankruptcy filing. Normally we would say, here's what it means for us operationally. Here's what it means for us financially. But now employees want to know, what does this mean for our ESG strategy? Does it change our commitment to diversity? What social factors did we consider? If we're doing a merger transaction, how do the cultures of the companies compare? Did we have a comprehensive governance process that really vetted this decision while considering a really wide range of factors?
Sydney Isaacs:
And so it's a much different world where you're not just putting news out one direction, but you're finding ways to engage employees and on a much wider range of topics. So as you can imagine, this is a little bit uncomfortable for some companies. And it's difficult when, of course, your employee base is also not homogenous. So it's not one perspective that you're trying to validate and reflect. It's a lot of different perspectives, sometimes at odds with one another.
Sydney Isaacs:
So the company is now in a harder position than I'd say they were several years ago. This kind of overlaps also with the concept of stakeholder capitalism, that the role of the corporation is not primarily to serve shareholders, but rather to consider lots of different stakeholders now. So this whole rethinking of the organization shapes how you communicate with employees in particular, but really other stakeholders as well.
Justin Bernbrock:
So it seems to me that there are significant pitfalls that management teams and company executives are at risk of walking into at any moment given the sort of new era in employee, employer relations. Particularly Sydney, as you mentioned, where checking your personal values and beliefs at the door is not as common as it once had been. So how can C-suite level executives and management teams navigate the minefields?
Sydney Isaacs:
Yeah, Justin, we hear that from clients a lot that there's just a risk of communicating on some of these more difficult topics. I had a client that said, I'm a healthcare company and I chime in on healthcare policy issues. And I don't chime in on social issues, political issues that are outside of my lane. So should I, or how should I?
Sydney Isaacs:
So clearly, it's something to be really thoughtful about. And it kind of goes back to knowing your employee base, knowing your communities and having that two way engagement that I was talking about. But companies also need to look at each issue really objectively and not do things on a whim. So we saw this after George Floyd's murder, for example, that every company said, "Gosh, I feel passionate about this and employees do, and should I say something, should I do something? What do I do?" And you saw a lot of companies taking a stand on that.
Sydney Isaacs:
But then a few months later we had some hate towards Asian women, for example. And so the question was why did you chime in on one thing and not the next thing? And so having a really objective framework that allows you to use the same lens to evaluate different situations will be critical. The other thing that we saw after George Floyd is that a lot of people had something to say, and if they didn't have something to back up their words, they got a lot of criticism. So you saw that with companies that had posted about black lives matter and then were silent on the topic of voting restrictions. That was a big issue that came up.
Sydney Isaacs:
So trying to find ways that are authentic to the company and its core values that don't just put words on a page, but that are intended to further change or dialogue is important. And again, that's going to be different for each company, but you have to find where your comfort level is and where your stakeholders are on that spectrum.
Sydney Isaacs:
And then lastly, I would just say you can't get away with this kind of robotic corporate speak anymore. People want their companies to have a bit of a personal touch and not to be a robot. So for example, we worked on a situation where there were a lot of layoffs and so a very kind of bad story to tell. Not a good message for anybody, but the company talked about it in terms of, as a leaner organization, we're going to be more resilient. So we're going to have less uncertainty in future industry cycles. And we're going to have more in more resources to invest in things that we're hearing from our customers, our communities and employees are important to them. So if you can kind of meet people where they are and focus on the areas of common ground, you can avoid stepping in the hornets’ nest on some of these dicier issues.
Dan Scorpio:
To Sydney's point, that authenticity is key and companies can no longer just do check the box exercises. Because employees don't stand for that anymore. And there are far and away easier and more opportunities for that type of outreach to be shared in a negative light. So externally to the media, social media, if you think about it, all of that is all around how we live today. And the really key point that we talk to companies about is to be authentic to you as a company and your culture, but also to your employees. And that's really important.
Justin Bernbrock:
I was going to ask Dan, specifically, this was one of your deals, but the Gibson brands company, are there any specific examples to come from that situation that are perhaps good examples, moving forward from a real world scenario. And I'll tell you before you get into it, I'm an amateur guitar player. I have seven Gibson guitars at this point. And I believe very strongly in the company's motto that only a Gibson is good enough. Though, I do have other guitar companies' guitars. Quite fond of Gibson.
Dan Scorpio:
Well, you, Justin, you're keen on a key point where if you have a company and a brand that people love, that's a huge asset to take advantage of and don't ignore that. And in that situation, you're exactly right. They're going through a restructuring through a chapter 11 process with a private equity, new owner coming out at the end. And this was a company that is iconic. It shaped the evolution of rock and roll, and people love their guitars and people are devoted to the brand. And that's a great thing. But the company had struggled in a few years or a few decades. And internally what we saw is that there was some skepticism about new ownership and that's not unusual for them. That happens quite a bit when you're going through a process like this.
Dan Scorpio:
And so what they decided to do was to learn from the last couple decades and try to do something new for their employees. And so they're based in Nashville, music city, and they rented a really historic venue in the heart of Nashville and threw a party for their team right at about the time when they were emerging from bankruptcy. And they brought these very high end guitars that people in the room had actually made. And these are real craftsmen, artisan. And what I remember is the look on the faces of these employees when they saw the new management team and the new owners talking about the vision, but also holding up a guitar that they had actually had a hand in making. They were almost overcome with emotion and that they were seen and heard by the new management team as valuable to the company.
Dan Scorpio:
And many of them said this was the first time in years that they had ever done anything like this for their employees. And for all of us involved in processes like this or advisors. Sometimes we lose touch with that. And just something like that can seem like an obvious thing, but it made such a difference. And really set the new tone that this would be a new company going forward. And they've done really well since. And so every time we talk to companies about how to manage something like this, I look back and think about being in that room and what the difference that effort made for employees who are so essential to the company going forward. And it really was a great thing to see.
Justin Bernbrock:
Yeah. I mean, I can only imagine. And it's a great, great lesson for companies facing any type of evolution in the corporate story, in the corporate history. So let's turn our attention now externally and talk about the company's engagement with customers, with vendors. Folks with whom or for whom the business presumably exists. How are communications with those parties managed properly?
Sydney Isaacs:
Yeah, going back to those initial two scenarios that I painted, the key point is reaching people as directly as possible. And I mention it in the context of employees, but it really is the same for customers and vendors and community leaders and we really orchestrate these filings. We have what we call a rollout, which is a minute by minute plan when the announcement goes out and the petition is filed at 8:01. And then at 8:02, we send a note to employees and 8:03 announce the town hall. And it's really that kind of a tick tock that is so detailed because it's critical that we reach people directly. We want them to hear from us. So that might be phone calls. It might be meetings, emails, letters. Sometimes it's posting something on the bulletin board, if it's employees who are hard to reach.
Sydney Isaacs:
So I'd say we start by asking who are the key stakeholders who matter most? Because sometimes it really is a relatively small group of people. There's a lot of noise when you have a major announcement, but who is really critical to making or breaking the success of the initiative that you're undergoing is generally a relatively small group.
Sydney Isaacs:
And can we reach them all directly through a phone call on day one? Or one time we took the sales team and we said we've got 1,000 key customers. We can't call 1,000 key customers, but we have 100 sales people who can all make 10 phone calls in a day. So then we trained the sales team and here's the talking points and here's how you address tough questions. And we kind of empowered them to be our spokespeople with that particular stakeholder group.
Sydney Isaacs:
So we really wanted to reach people so that they hear from us so that they can assess our own body language. Do we sound scared and panicked, or is this kind of business as usual? So the logistics which sometimes don't sound all that strategic actually really are critical. I mentioned an offshore driller, got employees in remote areas, and we spent a lot of time planning out executive travel. So that one key leader would be in each region at the exact moment that this was announced so that person could convey in both their work it's in their body language that this is an orderly process and it's going to leave us in a better position than we are now. And then the last point on communicating with folks is sometimes in a bankruptcy and other situations where there's a lot of change, facts can shift and things develop that you didn't expect, and we don't want to jeopardize credibility.
Sydney Isaacs:
And that's really a key point. And I know it's uncomfortable, sometimes to not tell everything you know, because you're getting the questions and you don't want to sound like you're being disingenuous or that you're holding back. But the minute you over share something that turns out to not be the case you've lost credibility. So we do try to advise companies to communicate conceptual themes and big messages and a vision, but to avoid some of the details, at least initially, since you don't want those to later shift and you have a kind of egg on your face. So those are just some kind of principles that we think about for communicating with different stakeholders.
Justin Bernbrock:
Got it. Again, super helpful advice to anyone facing this situation. So as you may have heard on some of the other episodes of the podcast, I do like to ask a question at the end, not about your specific practice, but about each of you personally. And that is if you were not doing what you currently do at Abernathy and McGregor, and assuming no limitations, sort of a world without end, what would you do? And I'll ask Sidney to go first.
Sydney Isaacs:
Gosh, I wish I had prepared. I'll tell you one of my personal passions is refugees. And so if I could make a difference in that part of the world, that would make me feel really good. My grandmother was a refugee herself, and that's just kind of always been my passion area. So if I could really just do something to change the world, helping people in that situation is what I would do. I don't know if that's more noble than you were looking for. There's all sorts of frivolous things I could give you too. My list is long, but that's what I got.
Justin Bernbrock:
No, that's great. That's really great. I guess I didn't give you the benefit of telling you what I would be, or what I would do, which is I would curate, build and run a luxury hotel brand. I'm fascinated with hotels. So Dan, what about you?
Dan Scorpio:
I love that one. Well, I will give a much, much less serious answer and I hope I don't look silly for doing so. But if I could do anything and if I had all the money in the world, I would buy the Minnesota Vikings, my favorite team, and hope to win a super bowl finally, after 50 some years.
Justin Bernbrock:
Well, there you go. That would be interesting. Well, again, thank you both so much in the time. I think that folks will tune in to hear the good advice that you have, and we really appreciate the time.
Sydney Isaacs:
Yeah. Thank you, Justin. We've enjoyed talking this through and of course, happy to continue the conversation with anybody and look forward to continuing to work with your great team at Sheppard Mullin.
Dan Scorpio:
Thank you, Justin. It's great to be here. I hope to hear some guitar playing on future episodes as well.
Justin Bernbrock:
You got to tune into a different podcast for that one, one on which folks are far more talented than me.
Sydney Isaacs:
Fair enough.
Justin Bernbrock:
All right. Thanks very much.
Bryan Uelk:
Again, everyone. This is Bryan Uelk of Sheppard Mullin for Restructure This with another shot of curated restructuring news. On February 25th, New Jersey bankruptcy, judge Michael Kaplan denied multiple motions to dismiss LTL Management's chapter 11 case effectively declining the invitation to deliver a significant blow to what has become known as the Texas two-step strategy.
Bryan Uelk:
Senator Dick Durbin of Illinois has promised to introduce legislation to ban the Texas two-step process. I'd very much like to see what the Senator comes up with. In fact, Senator Durbin, if you'd ever like to join us on Restructure This, to discuss the issue with some Chicago bankruptcy lawyers and the rest of the restructuring community would certainly love to have you. In other news late last week, Sanofi, a creditor in Mallinckrodt's chapter 11 case sought direct appeal of the company's chapter 11 plan to the third circuit. Sanofi has also sought to delay some distributions under the plan until the appeal is resolved.
Bryan Uelk:
More and more it seems these days, subsequent negotiations continue long after confirmation. For example, take the Purdue pharma case. The Purdue plan was confirmed in September of last year and only last week did the company finally reach a comprehensive deal through mediation to resolve the appeals to its confirmation order.
Bryan Uelk:
Under the terms of the deal, which is still subject to court approval the Sackler family has reportedly agreed to contribute north of another billion dollars to opioid victims. Bankruptcy judge Shelly Chapman of the Southern district of New York, who has been serving as mediator since mediation began in January, has also reportedly recommended that several personal injury victims and at least one member of the Sackler family attend the hearing to approve the settlement in order to quote, "Serve the end of justice," close quote. Judge Chapman recommends in her latest mediator's report that the Sackler family members in attendance at the hearing not be able to respond to comments made by opioid victims.
Bryan Uelk:
Great work judge Chapman. Perhaps when it's all over, you can come sort things out for Major League Baseball as recent headlines suggest they clearly get some help. Finally, Judge Ketanji Brown Jackson's confirmation hearing for a seat on the US Supreme Court begins on March 21st. I personally wish you the very best of luck and here's hoping for the sake of Democrats and Republicans, that it doesn't devolve into a political mess. Well, that's it for this dose of restructuring news. This has been Bryan Uelk of Sheppard Mullin for Restructure This.
Contact Information:
Abernathy MacGregor Website: https://abmac.com/
Sydney’s Bio: https://abmac.com/people/sydney-isaacs/
Dan’s Bio: https://abmac.com/people/dan-scorpio/
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