by At least 717 U.S. companies filed for Chapter 11 in 2025, a 14 percent increase over the prior year and the highest volume since 2010.
Each filing becomes a matter of public record the moment it hits the docket. The narrative that forms in the hours right after tends to stick, not because it’s accurate, but because it arrives first. Reporters, employees, and creditors fill the gap with whatever’s available. By the time leadership is ready to make a statement, the draft everyone else is working from has already been written.
That’s why bankruptcy shouldn’t be treated as a one-day event tied to the filing itself. Companies routinely focus intently on the initial announcement and then let the communications function follow what’s disclosed in the court proceedings — which is exactly the period during which employees and other stakeholders, let alone also the reporters covering it, are forming the judgments that determine whether the company is understood as recovering or on the path to unraveling.
With communications left strategically unfocused and tactically adrift across that span of time leading up to a formal reemergence or a strategic sale, a Chapter 11 filing creates a new dimension of reputational exposure. Here’s the approach to minimize those risks while protecting stakeholder trust and positioning the organization for recovery:
The bankruptcy filing rarely comes alone …
A Chapter 11 filing is almost never the only legal proceeding running. It often sits inside a cluster of eventual disputes that move on their own timelines. The communications strategy needs to anticipate and plan for each becoming a story that defines stakeholder understanding.
While most creditors are blocked from suing the company or trying to collect debts outside of the bankruptcy process, disputes can still arise over alleged wrongdoing, ownership of assets, or shareholder and securities claims. Employee and customer claims can add further complexity, and companies in regulated or critical sectors may also face increased government scrutiny, raising both legal and reputational risks.
… but to the media, it’s all one story
All these legal matters are separate, but to a reporter covering the aftermath of a Chapter 11 filing, they are one story: evidence for or against whether the company’s account of itself holds up.
That’s the fact a legal team, thinking case by case, can sometimes structurally overlook and where public relations counsel brings a particular strategic value. Managing communications in a bankruptcy means seeing both the forest from the trees and the trees from the forest: in other words, defining what, in aggregate, the story that the full assortment of litigation tells while at the same time having strategies to deal with each track of legal dispute. That means asking questions such as:
- Which moments in the bankruptcy process require proactive communications because they are likely to attract public attention or create uncertainty?
- Where are the greatest risks of misinformation or stakeholder confusion, and how should the company prepare for them?
- Which legal milestones are likely to influence customer confidence, supplier relationships, or investor perceptions?
- What developments are most likely to change the narrative around the restructuring, and how can the company help shape that narrative?
Many bankruptcy filings are procedural, but that doesn’t mean they are self-explanatory. A company closing stores may also be investing heavily in its strongest markets. An asset sale may preserve jobs rather than eliminate them. Debtor-in-possession financing may provide the liquidity needed to continue serving customers throughout the restructuring. These nuances are unlikely to emerge on their own. They require timely, credible communication.
Companies that integrate communications into a restructuring strategy from the outset, supported by a strong issues management and crisis communications approach, are better positioned to explain difficult decisions, preserve stakeholder trust, and reduce unnecessary reputational damage.
Bankruptcies often have two phases: long periods where little happens publicly, followed by major events, such as court rulings, asset sales, or settlements that can quickly become headline news. Communications teams need to prepare for both.
During quieter periods, companies have an opportunity to educate stakeholders, reinforce confidence, and explain the restructuring process. During periods of heightened activity, they must be prepared to respond quickly and communicate clearly.
The companies that fail to emerge anew from bankruptcy experience a communications deficit as intensely as they do the operational demise. Restructuring plans that are economically sound can still collapse if creditors lose confidence, if customer churn accelerates, or if media coverage positions the company as a cautionary tale rather than a turnaround story.
The brand and reputation a company defines during bankruptcy and carries out of it can shape everything that follows. Protecting the corporate brand is not a secondary concern to the restructuring process; it is a critical component of creating the conditions for a long-term transformation. A company that rebuilds trust among customers, employees, investors, and other stakeholders is better positioned to execute its restructuring plan and emerge stronger.
What discipline looks like, and what its absence costs
Delta’s bankruptcy communications strategy is widely cited as a textbook case. The company filed Chapter 11 in September 2005 and emerged 19 months later, with more than 95 percent of creditors voting to approve the reorganization plan. It went on to become the most profitable airline in the United States.
What made the difference wasn’t only the restructuring plan itself, which was sound. It was the consistency with which Delta communicated throughout the process — issuing updates at every major milestone, keeping creditors and employees oriented to where the company stood, giving journalists enough access to report accurately rather than speculatively.
The outcome was exceptional, and the communications strategy behind it was carefully calibrated to advance Delta’s business objectives.
Toys “R” Us is the case cited most often for the opposite reason. The company filed for Chapter 11 on September 18, 2017, weighed down by roughly $5 billion in debt left over from its 2005 leveraged buyout by Bain Capital, KKR, and Vornado Realty Trust. Four days before the filing, CEO David Brandon and four other senior executives split $8.2 million in retention bonuses, with Brandon receiving $2.8 million of it. The timing is what made it a story rather than a footnote — the bonuses were locked in before creditors, employees, or the court had any visibility into the filing at all.
The retention bonus became the frame through which the entire liquidation was covered, not because the underlying legal question was unusual, but because no communications strategy addressed the plain optical problem in real time.
That is the cost of abandoning communications discipline. Once an unfavorable narrative becomes the accepted explanation for events, every subsequent development is interpreted through it. The financial restructuring may still proceed, but the organization’s reputation, stakeholder trust, and strategic flexibility become significantly more difficult—and more expensive—to recover.