Game over …
Communications
and Legal Aspects
of Restructuring
16 April 2009
Hill & Knowlton International Belgium
Crowell & Moring
AmCham
1
Welcome
Speakers
Emmanuel Gybels (C&M)
Dimitri Schildmeijer (H&K)
Peter Otten (H&K)
Moderator
Elaine Cruikshanks (H&K)
2
Agenda
•
•
•
•
Concepts of restructuring
New legal developments
Communicating in a new era
Communications and legal model
• Preparedness and planning
• D-Day and beyond
• Conclusions
3
Concept of Restructuring - legal
• Broad concept
•
•
•
•
•
•
•
•
•
Mergers and acquisitions
Sale of assets
Debt restructuring
Transfer of undertakings (departments)
Collective dismissal
Closure of undertakings
Concordat (Chapter 11)
Bankruptcy
Liquidation
4
Points of interest - legal
• Points of particular interest in many restructuring
operations:
• Information and consultation of employees (employees’
representatives)
• Destiny of contracts with suppliers, customers, etc.
• Asset due diligence (e.g. IP rights)
• Permits, licenses
• Subsidies
• Real estate
• Restructuring cost
• Draft and use timetable and
prepare draft documents
5
New development - legal
• Act of 31 January 2009 on the continuity of companies
Entered into force on 1 April 2009
• Out of court solutions:
• Amicable settlements with two or more creditors
• Important role for the court appointed mediator
6
New development – legal (cont’d)
•
In court solutions:
• Amicable settlement with two or more creditors with a view to the
restructuring of the debtor's liabilities
• Reorganization plan, to be approved by the creditors and the court
(cf. old concordat)
• Transfer of (the viable part of) the debtor's business under court
supervision
•
Important note:
• New provision on the transfer of employees: purchaser can choose
the employees he wants to have transferred together with the
business
7
Three Truths - Communications
1. Restructuring
has the basics of
a crisis – but you
have time for a
plan.
2. Internet has changed the
communications environment:
•
•
•
Internet and mobile internet
almost real time
From war of words to a visual
world
Social media connects
employees
3. Many more stakeholders take an interest –
you are now everybody’s problem.
8
Plane crash Turkish Airlines in
Amsterdam
8-minutes after crash first
message on Twitter – it was
used by BBC and CNN
Twit Pic picture of the crash
Video: seconds after
the crash
Three Truths - Communications
1. Restructuring
has the basics of
a crisis – but you
have time for a
plan.
2. Internet has changed the
communications environment:
•
•
•
Internet and mobile internet
almost real time
From war of words to a visual
world
Social media connects
employees
3. Many more stakeholders take an interest –
you are now everybody’s problem.
10
Social media destroying reputation
RED LOBSTER RESTAURANT CHAIN
Facebook group:
Calling all RED LOB employees
Size:
898 members
Type:
Business - Employment & Work
“I currently work at red lobster, it has
changed my perception of seaside
dining, I used to associate that with
peace and comfort, now I associate
it with the pain and suffering.”
“gotta love the way the managers treat
you like 2nd class citizens, even
though I’ve been there longer then
any of them. Tired of getting treated
like shit. “
“be careful when you quit red lobster!
apparently they're a vindictive
bunch.”
11
Three Truths - Communications
1. Restructuring
has the basics of
a crisis – but you
have time for a
plan.
2. Internet has changed the
communications environment:
•
•
•
Internet and mobile internet
almost real time
From war of words to a visual
world
Social media connects
employees
3. Many more stakeholders take an interest –
you are now everybody’s problem.
12
Today’s case study
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H&K Communications Model
READINESS
& RISK
REDUCTION
Define internal &
external context
Desired outcome
Content creation &
toolbox
Systems and
processes
CAPABILITY
& CAPACITY
Train media &
internal
spokespeople
RESPOND
& MITIGATE
Scenario activation
Media analysis
• Readiness and
reduction
Staffrisk
activation
Damage assessment
• processes
Capability
and oncapacity
Monitoring
highest
Test
10(0) day plan
alert
(Desktop simulation,
•dry-run)
Respond and mitigate Stakeholder relations
Media outreach
post-crisis
• Repair
and recover
Confirm team
& roles
Engage stakeholders
Readiness
Rapid review & response
Monitoring
War room
Ongoing reporting
-----------------Assumes
Business Case
REPAIR
& RECOVER
--------------Assumes sign-off
Business Case
Readiness and risk reduction for
communications
READINESS
& RISK
REDUCTION
Assumes the existence of Business Case
• Internal & external context
• Strategic approach
• Content creation & toolbox
• Systems and processes
• Monitoring
“When preparing for a crisis, it is instructive to recall that
Noah started building the ark before it began to rain”
Norman Augustine, Lockheed Martin
15
Capability and capacity for
communications
CAPABILITY
& CAPACITY
•Media & internal spokespeople training
•Process test
(Desktop simulation, dry-run)
•Team & roles
•Confirm readiness
•Set-up war room
16
Preparedness plan for legal
•
Collective dismissal / closure of undertaking
• Analysis:
• number of people to be terminated over certain period to
determine application of law on collective dismissal
• department is closed or not
• people possibly concerned (trade union representatives?)
• calculations with respect to costs of dismissal
No communications
about the intention to
restructure before the
first meeting with
employees
17
Preparedness plan for legal
• Draft timetable
• Prepare documents in draft form
(in various languages if needed)
• Invitation for first meeting
• Written report to be provided to the
employees during first meeting
• Draft framework minutes for meetings
• Draft letters to the authorities
• Draft standard termination letters /
termination agreements
• Social plan?
• Make team for negotiations
• CEO – HR manager – secretary – lawyer –
social secretariat
18
Preparedness plan for legal
• Transfer of customer service department
• Application Collective Labor Agreement n° 32 bis / Council
Directive 2001/23/EC
• Transfer of all employees concerned
• In principle: prohibition to terminate employees and transfer of
all rights and obligations
• However: limited risk for sanctions
19
Example of timeline - legal
Invitation to all employees for a meeting with management
↓
First meeting: information to all employees of the intention of
the collective dismissal and the potential closing of a
department
↓
Subsequent meeting(s)
↓
Closing of information and consultation procedure after last
meeting
↓
Notifications on intention to proceed with the collective
dismissal and the closure
↓
Example of timeline – legal (cont’d)
↓
Notifications on intention to proceed with the collective
dismissal and the closure
↓
Contestation of the information and consultation procedure by
the employees (representatives)
↓
Prohibition to terminate the employees that are involved by
the collective dismissal
↓
Termination of employment agreements
↓
Payment of closing indemnities
↓
Negotiate termination agreements
Pre-D-day: are you ready?
Organize “dry run” before D-Day of the information and consultation
process
Joint approach from Communications & Legal
22
Q&A
23
D – Day BelgaPaint
8:00
9:00
9:45
10: 00
10: 00
11:30
12:00
Preparatory meeting
(Special) Works Council
Contact authorities
Employee meeting
Send press release
All back to work?
Inform other relevant
stakeholders
12:30
Announcement via
internal channels
12:30
Send by courier to
absentees
13:00
Time-out
Ongoing Analysis monitoring
17:00
Discuss strategy &
prep D-Day+1
24
D – Day BelgaPaint
8:00
9:00
9:45
10: 00
10: 00
11:30
12:00
Preparatory meeting
(Special) Works Council
Contact authorities
Employee meeting
Send press release
All back to work?
Inform other relevant
stakeholders
12:30
Announcement via
internal channels
12:30
Send by courier to
absentees
13:00
Time-out
Ongoing Analysis monitoring
17:00
Discuss strategy &
prep D-Day+1
25
Respond and mitigate
RESPOND
& MITIGATE
•
Media scenario activation
•
Task force activation
•
Monitoring on highest alert
•
Media outreach
•
Engage stakeholders
•
Rapid review & response
•
Ongoing reporting
26
Repair and recovery
REPAIR & RECOVER
•
•
•
•
Media analysis
Damage assessment
10(0) day plan
Stakeholder relations post-crisis
27
After D-Day - legal
• Case study:
• Information and consultation proceedings resulting in terminations
(and social plan)
• Negotiate termination agreements
• Continued compliance with provisions of social plan
• General:
•
•
•
•
Transfer of agreements (notifications?)
Changes to by-laws
Changes of authorities of employees and directors
Update list of assets (IP or others)
28
Conclusions - legal
•
•
•
•
•
•
•
Make cost analysis and decide on best option
Make timetable
Prepare draft documents in advance and in several languages if required
Compose team with clear assignments
Organize dry run
Take into account other aspects than the mere
restructuring operation itself (quid ongoing contracts,
quid IP rights, quid lease agreements, quid authorities
granted within the company, …)
A well organized and prepared restructuring can lead to a new
start / poorly planned restructuring can result in a loss of image
and negative effects on employee-management relations
H&K Communications Model
READINESS
& RISK
REDUCTION
Internal & external
context
CAPABILITY
& CAPACITY
Media & internal
spokespeople
training
Desired outcome
Content creation &
toolbox
Systems and
processes
RESPOND
& MITIGATE
Media scenario
activation
Task Force activation
Process test
(Desktop simulation,
dry-run)
Monitoring on highest
alert
Team & roles
Media outreach
Confirm readiness
Engage stakeholders
Set-up war room
Rapid review & response
Monitoring
Ongoing reporting
REPAIR
& RECOVER
Media analysis
Damage assessment
10(0) day plan
Stakeholder relations
post-crisis
Conclusions
• Communication
• Be prepared – follow all steps
in the process and start on
time
• Expect the unexpected
• Communicate from the heart
• Take control of the
communications process
• A crisis is not over until it’s
over
An unusual, yet effective combination:
“The organisation of the press conference – held at the
offices of Crowell & Morning and jointly arranged by
Hill & Knowlton was also a novelty.
This shows that despite the theoretical gulf between law
firms and lobbyists, they can work effectively in
partnership. “
Jeremy Fleming, April 2008
32
Q&A
33
Thank you
71, Rue Royale
B-1000 Brussels
Belgium
118, Av. de Cortenbergh box 8
B-1000 Brussels
Belgium
Phone: +32.2.282.4082
Fax: +32.2.230.6399
Tel +32 2 737 95 00
Fax +32 2 737 95 01
brussels-info@hillandknowlton.com
www.crowell.be
www.hillandknowlton.be
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