WORK WE’VE DONE: CASE STUDIES

Surviving a bankruptcy

A company’s subsidiary filed for Chapter 11 protection to resolve mounting lawsuits that were threatening overall corporate profitability. Coordinated stakeholder outreach earned management recognition for facing a strategic challenge proactively and with due regard for constituents’ interests.

Client Challenge: Prevent a subsidiary’s bankruptcy from damaging corporate valuation

Mounting personal injury lawsuits against a small subsidiary of a diversified manufacturing company were threatening overall corporate profitability and making Wall Street nervous. Management decided to have the subsidiary file for Chapter 11 protection. This would permanently resolve current and future claims and allow the business to continue operating normally during and after the bankruptcy process. But would this strategy erase the cloud of uncertainty hanging over the company’s stock, or darken it further?

Sharon Merrill Approach: Carefully coordinated outreach to external and internal stakeholders

Sharon Merrill executed a comprehensive communications program aimed at instilling stakeholder confidence in management’s strategy. Starting on the day of the Chapter 11 filing with a press release, investor conference call and all-hands meetings for employees across the company, an integrated series of communications delivered a high level of transparency through several months of legal proceedings leading to the subsidiary’s successful emergence from bankruptcy.

Results: The bankruptcy is perceived as a net plus for the corporation

Reinforced by positive media coverage, the client’s outreach activities alleviated stakeholders’ concerns and enabled the subsidiary to continue operating successfully and emerge from bankruptcy with strong momentum. Management gained recognition for facing a strategic challenge proactively and with due regard for the interests of all stakeholders. The Chapter 11 process was completed efficiently and successfully. And Wall Street responded favorably, as the price of the company’s stock rose more than 60% in the six months following its initial announcement.