Social media in insolvency and restructuring deals
Produced in partnership with Nick Hood of Opus Restructuring LLP
Social media in insolvency and restructuring deals

The following Restructuring & Insolvency practice note produced in partnership with Nick Hood of Opus Restructuring LLP provides comprehensive and up to date legal information covering:

  • Social media in insolvency and restructuring deals
  • Communication paradigms—hierarchy and network
  • Case study—Niemetz Confectionary Production GmbH
  • Practical lessons for insolvency and restructuring professionals
  • Law applicable to social media ‘transgressions’
  • The transit lounge effect
  • Use of social media by insolvency practitioners to comply with regulatory regulations
  • Overall legal strategy on social media for insolvency and restructuring practitioners and their advisers

Insolvency and restructuring professionals have grown up in an environment where they have generally confined communication (both internal and external) to what is prescribed by statute. The approach has been to maintain control over all communication relating to their cases and to limit its scope wherever possible.

Since the development of social media, every stakeholder potentially has a public voice that can be heard by their peers. Formerly silent target groups have turned into publishers of information.

They can no longer be ignored by those responsible for the conduct of insolvency and restructuring assignments, whether these are under formal legal proceedings or informal work outs.

Communication paradigms—hierarchy and network

Before social media, business communication had certain core characteristics:

  1. external—from inside organisations to outsiders

  2. one-to-many and strictly one way

  3. internal—top-down

  4. based on channel ownership (through owned or paid media)

  5. the communicator controlled the message

  6. approval cycles were complex and slow, often glacial

In the modern social media age, communication has changed radically, with new key features:

  1. peer-to-peer

  2. many-to-many and very much two way

  3. based on interest, not restricted entitlement

  4. control of tone is vital

  5. very fast

Case study—Niemetz Confectionary Production GmbH

Founded in 1890 and based in Vienna, this manufacturer was famous for its chocolate marshmallow Schwedenbomben product also known as 'Swede’s Bombs'. These sweets are as iconic to Austrians as Sachertorte.

It filed for bankruptcy protection in February 2013 and continued to

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