As the year winds down, I attended a panel discussion entitled “Dumbest Things Companies Do in Distress.” The panelists were long-time experienced attorneys, bankers, and turn-around consultants. It’s going to be interesting (and maybe scary) to watch a newer generation of professionals who have never been through this before. A shout out to the Expert Webcast team, and my takeaways:
4 Main Takeaways
- DENIAL. As we have said for many years at DelCotto, “No surprises.” One of our main mantras. No one likes to be caught off guard, especially with turmoil and financial problems that should have been seen coming from a mile away. A lender does not want to hear that payroll is due tomorrow, while asking for an overadvance today. Not only is this ridiculous business practice, it also creates a huge lack of confidence in management.
- TRUST. As George Schultz just said on his 100th birthday, “trust is the coin of the realm.” When trust is in the room, good things can happen. When trust is gone, it’s gone…. Living in denial accompanied with a lack of proactive communication by a distressed company is a death knell. Your credibility is worth its weight in gold.
- COMMUNICATION PLANNING. Good relations don’t just spring out of thin air. They are created with ongoing communications. Real, live talking… not long emails out of the blue. Solid and proactive communications about financial distress are not easy, and getting some solid professional advice is encouraged. This doesn’t mean you are filing for bankruptcy nor that you are in dire distress. Proactive team-building communication efforts are invaluable over the longer term, and need to be tailored to the different constituencies.
- HIRE EXPERIENCE. There are lots of lawyers and lots of “turn-around consultants” out there. As management, do your homework and find someone you trust and believe is the “right fit” for your company. It is not a one size fits all deal.
Going into a New Year…
Financial distress is not to be an embarrassment that is hidden from at all costs. Especially in 2020, 2021, and the future fallout. If that is the route you choose, I promise it won’t end well. I will do a deeper dive into these issues in the new year. Be smart and remember that there is no need to reinvent the wheel/be forced to learn things the hard way.
In my last blog of 2020, I wish you well. May you have some rest, reflection and relaxation over the remaining days of the year, and enjoy time with family. We will all need to be our best in the new year.
About DelCotto Law Group
DelCotto Law Group is Kentucky’s asset protection law firm known for its commitment to the lifetime success of its clients. With offices located in Lexington, Louisville and Danville, DLG serves Kentuckians with complicated financial matters, especially in the areas of bankruptcy and complex litigation. For more information please call (859) 231-5800, email email@example.com or reach us on our contact page.