By Lee Pacchia
If you’re familiar with the Chapter 11 bankruptcy process, you know how much rides on the First Day Hearing. Tensions run high as debtor’s counsel present the Court with a set of requests for various forms of relief to ensure the smooth operation of the debtor’s business during the bankruptcy process. Typically, a debtor motions for things that are critical to continuing operations like approval to pay employees and vendors, authorization to use cash collateral, permission to enter into post-petition financing agreements, or request for a limited automatic stay to protect essential contracts and licenses. Creditors and other parties in interest may take advantage of the first opportunity to show up and object to any motions. It’s a critical event in the life of any case – the tone is set, positions are established and a narrative takes root in the minds of all key stakeholders. How debtor’s counsel crafts and packages their position at this opening point is critical.
Given the importance of this day, debtors’ attorneys in larger cases have increasingly leveraged PowerPoint presentations to give the Court and interested parties a more condensed view of how they see the case and their plans for restructuring through the bankruptcy process. Rite Aid, Celsius, Voyager and FTX are all noteworthy examples. While the use of these presentations tends to vary somewhat from lawyer to lawyer, they have come to be viewed as an accepted and effective way to visually communicate and synthesize a company’s story for the Court.
Judges, as the primary intended audience, have generally tolerated the utilization of PowerPoints in First Day Hearings, especially when entered into the record. There have been some public complaints about the lengths of these documents and as bankruptcy courts become busier in coming months and years, it’s reasonable to assume that there will be some pushback against the lengthiest of presentations (the deck used in Rite Aid ran up to 61 slides). While every situation is different, lawyers can find themselves in a bit of a Catch 22 when designing these presentations. Detailed accounts of a debtor’s story always run the risk of criticism for being too long to read and onerous to sit through in a courtroom setting, but on the other hand, an overly abbreviated version runs the risk of rendering the exercise entirely without impact. Balance needs to be struck, but then again that’s exactly what all good litigators do every day in Court.
As communications advisors it is difficult for us to view these presentations as strictly legal documents. PowerPoint presentations, in their use of visuals, infographics and plain language, tend to be much more accessible to lay people than court filings. These characteristics make First Day PowerPoints effective tools to engage with stakeholders, address questions or concerns they may have and shape their perception of the case and the broader situation. It can be a highly effective mechanism to explain a debtor’s complicated operation or speak to where unencumbered value may or may not lie. But as with any strategic communications initiative, it’s imperative to think critically about what the debtor is trying to accomplish and make sure that every element of the presentation aligns with every aspect of the debtor’s communications plan for the case.
What comes with greater accessibility is greater shareability. The lawyers preparing the presentation have to anticipate reporters referencing or including slides in their stories, or other interested parties sharing select information directly or via social media. This exposes the messaging to additional audiences that can interpret the information in different ways beyond the courtroom. While this increased exposure isn’t necessarily a bad thing for debtors, restructuring professionals need to be aware of the implications, and anticipate them as part of the message and content development process. For example, consider Voyager’s First Day Presentation, which ended up on Reddit where it was dissected and critiqued by a number of users. Also, a rudimentary presentation could give viewers a negative impression of the overall restructuring effort. Longwinded or unfocused analysis could engender annoyance from critical audiences. Key technical legal arguments may not be best made through visuals and infographics.
Handled improperly, these presentations could do far more harm than good. We recommend keeping a few things in mind when considering a First Day Presentation:
The rise of First Day presentations in bankruptcy courts represents a powerful tool for debtors navigating the complex Chapter 11 landscape. However, debtors must tread carefully, balancing the benefits of user-friendly communication with potential pitfalls, while always keeping the courtroom dynamics and judge’s preferences in mind. Deploying these assets requires nuanced communications skills but if done right they can significantly influence the outcome of Chapter 11 bankruptcy cases.
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