The call usually comes late on a Friday afternoon. There’s a tremor in the CEO’s voice as they explain their company’s situation – cash is running low, creditors are calling, and employees are starting to whisper about job security. As a bankruptcy and turnaround consultant, these are the moments that define our profession. We’re not just financial advisors; we’re crisis managers, confidence builders, and sometimes, the last line of defense between survival and dissolution. 

In the complex landscape of modern business, few challenges test a company’s resilience quite like navigating through bankruptcy. The statistics are sobering – only about 10% of companies that file Chapter 11 successfully emerge from bankruptcy. Yet, those that do survive often become compelling examples of corporate resilience and strategic transformation.

The First 72 Hours

Walking into a company facing bankruptcy or emerging from bankruptcy feels like waking up in a dark place, surrounded by strange noises.  All you know is you need a plan and a plan that gets you out quickly and safely. The atmosphere is charged with anxiety, and every decision carries immense weight. Our first task is always the same: assess cash position and immediate obligations. It’s not uncommon to find ourselves huddled in conference rooms, poring over financial statements, conducting operational diagnostics, prioritizing critical customer and supplier relationships and doing so while the weight of thousands of employees’ livelihoods rests on our ability to find viable solutions.

Throughout my career, I’ve had the pleasure of working with multi-million-dollar family-owned businesses to the largest names on Wall Street.  Make no mistake, the pressure is the same to those in leadership roles.  This is a must get right career making moment. The stakes are high on this field and winning is the only option. What often makes the difference between surviving and folding is being able to effectively communicate the plan.

The Three Phases of Successful Turnaround

The most successful bankruptcy transformations often follow a similar pattern.

First comes the stabilization phase – stopping the bleeding through immediate cash management and operational triage.

Then comes the strategic assessment – determining which parts of the business are viable and which need to be restructured or eliminated.

Finally, there’s the rebuilding phase, where we help create a new, sustainable business model. 

The key to all of this is not only having a clearly laid out plan but also being able to effectively communicate that plan to your people. Everyone across your company needs to be onboard, people need clear direction but they need to understand the reasoning behind it. Depending upon the size of the company, the type of bankruptcy support in place and the time frame around financial feasibility, the deployment of resources must be precisely calibrated, with cash management specialists, operational restructuring experts, and stakeholder communication teams working in concert to navigate the challenging waters of reorganization. Getting communication wrong is often the difference between sinking or swimming.

Communication Before Execution

A common problem with any change management event, whether it be bankruptcy, an M&A or even a shift in culture, is a lack of alignment and communication. There’s a tendency to move fast and ask questions later during a restructuring, but in my experience that is absolutely a mistake. If your leaders and your employees are not bought in to every step of the process, your chances of success drop dramatically.

Perhaps the most challenging aspect of bankruptcy consulting is managing multiple stakeholders with competing interests. Picture yourself conducting an orchestra where each section is playing from a different score. You’re simultaneously reassuring employees about their next paycheck, negotiating with suppliers who are demanding payment, calming nervous customers about service continuity, and working with creditors who want immediate answers.  That’s why we must begin with a destination statement for the entire journey and a goal for each relationship for which we are about to embark. You want all stakeholders to be bought in on this plan and have an understanding of the plans impact during the three major phases, stabilization, strategic assessment, and rebuild.

Destination Statement/Reorganization Plan

Successful corporate reorganization typically follows a well-defined yet complex path. The process begins with the formation of a creditors’ committee, a crucial step that brings key stakeholders to the table. This committee works with company leadership to develop a comprehensive reorganization plan – one that must satisfy both the court’s requirements and the practical needs of the business.

The reorganization plan itself becomes a blueprint for transformation and the basis for your communication to your people. It typically involves multiple components: debt restructuring, operational improvements, cost reduction initiatives, and strategic repositioning. Successful plans go beyond mere financial restructuring to address fundamental business issues that led to the bankruptcy.

Working with a recent client on this journey, the first discussion from an operational lens always begins with two questions: 
1. What is the destination you seek and by when?  The second question is,
2. What are the operational processes that are preventing profitability and customer satisfaction or loyalty? 
Then use data and facts to start taking action.

Doing it Alone is a Mistake

Make no mistake, restructuring is hard work. The 90% that fail at this are usually led by people who have never gone through a bankruptcy before. You want to seek guidance from experts who have not only done this before, but were actually successful, and have a process for replicating that success.