The 5 W’s of Bankruptcy Communications

You might be an expert on bankruptcy, but communicating its practical realities to clients can get complicated.

The Who, What, and Why of Bankruptcy

Eden Gillott

February 5, 2019 12:59 PM

As someone who handles bankruptcy cases frequently, you know the ins and outs. You know the legal implications of different types of bankruptcies and restructuring. But what about your client? Does your client understand how it will be perceived and the nuances of explaining the Chapter 11 process to employees, customers, vendors, and investors?


For many people, the term “bankruptcy” conjures up negative images of boarded-up buildings, foreclosure signs, and Mr. Monopoly with his pockets turned out. That’s usually inaccurate. Nonetheless, you must deal with that misperception by reassuring, persuading, and informing your client’s audiences. Your communications must clearly and simply explain what Chapter 11 means, dispel common fears, and establish credibility.

Bankruptcy communications must be strategic. They must guide your client in who must be informed, what needs to be said, the forums in which to make announcements and disclosures, and when is the optimal timing.


Timing is critical.

Whenever a company closes a retail outlet or factory or lays off a few people, the rumor mill kicks in. So does speculation. Is what happened at one location a harbinger of major financial difficulties and massive layoffs down the road?

Most often, the first word comes when a company makes a filing in U.S. Bankruptcy Court and simultaneously announces it publicly. Sometimes, it’s beneficial to have the prospect aired publicly before filing (such as Sears). Pacific Gas & Electric, facing billions of dollars in potential liability as a result of Northern California wildfires, was required to give a 15-day notice of intent to employees under a new state law.

Regardless of when the communications occur, they must be carefully orchestrated, must set the tone, and must reassure.


Negative financial news can set off rumblings in the rumor mill. Your client’s employees, customers, vendors, and investors will wonder: “How does this affect me?” If they aren’t reassured quickly and clearly, it can create a crisis of confidence that undermines the business.

Crafting and tailoring these communications depends on who the target audience is. While each group has its own interests, the underlying message must be the same. Otherwise, you risk undermining trust and credibility.


Your communications need to address the individual’s interests. Employees will wonder if they’ll still have a job and will start sending out resumes. Customers will wonder if the company will shutter its doors à la Sears and will begin to shop elsewhere. Vendors will wonder if they’re going to be paid for their products and services.

Our brains are always scanning for how the information being given to us is relevant to us. You must soothe nerves by letting people know what to expect and anticipating questions that you know will be raised.

How much information should you share? Get to the bottom line, quickly. Don’t get lost in the weeds or get bogged down with excessive details. Otherwise, you run the risk of confusing and overwhelming the listener.

Your communications must focus on the future: Show how Chapter 11 will result in a stronger company. Explain how the process benefits each target audience.

[RELATED: Nomination deadline for the United Kingdom is February 18]


In Chapter 11, your communications are external and internal.

The most obvious is a news release announcing the filing. This will reach the public and hence your customers. But it’s just the beginning.

A solid strategic communications plan also provides packets of information that must be shared with employees, vendors, and others who are critical to keeping your client’s business operating: Letters from management, Q&As, Chapter 11 terms and definitions, sequence of events, and talking points for hotlines.

The simpler and less scary you make the process seem, the more reassured your stakeholders will be.


Eden Gillott, president of Gillott Communications and a former business professor, resolves issues both in and outside the media’s glare — from celebrity scandals and corporate fraud to criminal and civil litigation. Educated at Harvard and NYU, she’s co-authored A Lawyer’s Guide to Crisis PR (Second Edition) and A Board Member’s Guide to Crisis PR. She's been featured in and written for the Wall Street Journal, the Washington Post, Los Angeles Times, NPR, Financial Times, Bloomberg Law, Law360, California Lawyer, Verdict, Attorney at Law Magazine, and The Bankruptcy Strategist (an ALM publication).

Related Articles

How PLMJ's Unique Structure Shapes Its Insolvency Practice

by Best Lawyers

A leading attorney with the 2019 "Law Firm of the Year" winner for Insolvency and Reorganization Law in Portugal speaks to Best Lawyers CEO Phillip Greer.

PLMJ "Law Firm of the Year" Interview

It Was a Very Bad Year for Retail

by Michelle V. Rafter

While overall business bankruptcies dropped 5.4 percent through Q3, in excess of 300 stores filed for Chapter 7 or 11 in the same period, including big names like Toys “R” Us, Gymboree, and Payless ShoeSource.

Bad Year for Retail

A Practical Guide for Chapter 7 Practitioners

by Peter W. Hansen

Peter Hansen confronts and debunks common misconceptions surrounding debt repayment, bankruptcy and consolidation propagated by politicians and companies.

Large cracked piggy bank with person putting Band-aids on cracks

The Next Chapter

by Patrick M. Shelby

Among its uncountable other disruptions, the pandemic upended U.S. bankruptcy procedures. Congressional relief, legislative changes, amended legal provisions: What lies ahead for those looking to file?

COVID-19's Impacts on Bankruptcy Procedures

A Corporate Veil Remains Unpierced

by Peter McGlynn

How an Unwinnable Case was Won

A Corporate Veil Remains Unpierced

Who Gets the Nod When Deciding Between Expert Witnesses?

by Safra Ducreay

It’s not just a matter of experience—often you need to look deeper than what's on the resume.

How to Choose Between Expert Witnesses

An Interview With Eberhard Braun of Schultze & Braun

by Best Lawyers

The 2019 "Law Firm of the Year" winning firm was recognized in Germany for Restructuring and Insolvency Law.

Eberhard Braun Interview


by Joanna Barsh, Lauren Brown, and Kayvan Kian

Burden, blessing, or both?


Trending Articles

Presenting The Best Lawyers in Australia™ 2025

by Best Lawyers

Best Lawyers is proud to present The Best Lawyers in Australia for 2025, marking the 17th consecutive year of Best Lawyers awards in Australia.

Australia flag over outline of country

Legal Distinction on Display: 15th Edition of The Best Lawyers in France™

by Best Lawyers

The industry’s best lawyers and firms working in France are revealed in the newly released, comprehensive the 15th Edition of The Best Lawyers in France™.

French flag in front of country's outline

How To Find A Pro Bono Lawyer

by Best Lawyers

Best Lawyers dives into the vital role pro bono lawyers play in ensuring access to justice for all and the transformative impact they have on communities.

Hands joined around a table with phone, paper, pen and glasses

How Palworld Is Testing the Limits of Nintendo’s Legal Power

by Gregory Sirico

Many are calling the new game Palworld “Pokémon GO with guns,” noting the games striking similarities. Experts speculate how Nintendo could take legal action.

Animated figures with guns stand on top of creatures

Announcing The Best Lawyers in New Zealand™ 2025 Awards

by Best Lawyers

Best Lawyers is announcing the 16th edition of The Best Lawyers in New Zealand for 2025, including individual Best Lawyers and "Lawyer of the Year" awards.

New Zealand flag over image of country outline

Announcing the 13th Edition of Best Lawyers Rankings in the United Kingdom

by Best Lawyers

Best Lawyers is proud to announce the newest edition of legal rankings in the United Kingdom, marking the 13th consecutive edition of awards in the country.

British flag in front of country's outline

Announcing The Best Lawyers in Japan™ 2025

by Best Lawyers

For a milestone 15th edition, Best Lawyers is proud to announce The Best Lawyers in Japan.

Japan flag over outline of country

The Best Lawyers in Singapore™ 2025 Edition

by Best Lawyers

For 2025, Best Lawyers presents the most esteemed awards for lawyers and law firms in Singapore.

Singapore flag over outline of country

Announcing the 16th Edition of the Best Lawyers in Germany Rankings

by Best Lawyers

Best Lawyers announces the 16th edition of The Best Lawyers in Germany™, featuring a unique set of rankings that highlights Germany's top legal talent.

German flag in front of country's outline

How Much Is a Lawyer Consultation Fee?

by Best Lawyers

Best Lawyers breaks down the key differences between consultation and retainer fees when hiring an attorney, a crucial first step in the legal process.

Client consulting with lawyer wearing a suit

Celebrating Excellence in Law: 11th Edition of Best Lawyers in Italy™

by Best Lawyers

Best Lawyers announces the 11th edition of The Best Lawyers in Italy™, which features an elite list of awards showcasing Italy's current legal talent.

Italian flag in front of country's outline

Presenting the 2024 Best Lawyers Employment and Workers’ Compensation Legal Guide

by Best Lawyers

The 2024 Best Lawyers Employment and Workers' Compensation Legal Guide provides exclusive access to all Best Lawyers awards in related practice areas. Read below and explore the legal guide.

Illustration of several men and women in shades of orange and teal

Things to Do Before a Car Accident Happens to You

by Ellie Shaffer

In a car accident, certain things are beyond the point of no return, while some are well within an individual's control. Here's how to stay legally prepared.

Car dashcam recording street ahead

Combating Nuclear Verdicts: Empirically Supported Strategies to Deflate the Effects of Anchoring Bias

by Sloan L. Abernathy

Sometimes a verdict can be the difference between amicability and nuclear level developments. But what is anchoring bias and how can strategy combat this?

Lawyer speaking in courtroom with crowd and judge in the foreground

The Push and Pitfalls of New York’s Attempt to Expand Wrongful Death Recovery

by Elizabeth M. Midgley and V. Christopher Potenza

The New York State Legislature recently went about updating certain wrongful death provisions and how they can be carried out in the future. Here's the latest.

Red tape blocking off a section of street

Attacked From All Sides: What Is Happening in the World of Restrictive Covenants?

by Christine Bestor Townsend

One employment lawyer explains how companies can navigate challenges of federal and state governmental scrutiny on restrictive covenant agreements.

Illustration of two men pulling on string with blue door between them