The General Counsel Netherlands’ Annual Conference 2023 took place on Thursday 30 March 2023. One of the round tables during this congress was about the do’s and don’ts for General Counsels when restructuring in case of crises. We will highlight some of the topics of discussion during this round table.
The common thread of the discussions during the round table was, however, that the General Counsel should not only monitor the legal contents, but especially the process during restructurings in case of (unforeseen) crises. A brief anthology.
Documenting the process/decisions
It is widely considered wise to record the restructuring process – and the decisions taken in that process – in writing. However, it is often forgotten to include the background to the decision or the facts on the basis of which the decision was taken in the written record This could be done, for example, by including the background in the considerations included in the decision. However, it can be objected that a written record should not become an end in itself that could hinder the progress of the restructuring process. However, any discussion about why a decision was taken at the time is significantly reduced by a good written record. The risk of liabilities is correspondingly reduced.
The General Counsel is the (moral) process monitor of a restructuring
During the round table, the proposition was also put forward that the General Counsel is the (moral) process monitor of a restructuring. In that context, the General Counsel should not only focus on the legal contents, but above all keep all stakeholder interests in focus. Additionally, the General Counsel should keep all stakeholders connected to the restructuring process. This would prevent surprises with all possible (legal) consequences.
What was interesting about the round tables was that the General Counsel also increasingly sees itself as a moral process monitor. In specific terms, this means that the General Counsel should, for example, recognize in a timely manner when internal advice is still sufficient on how to handle a crisis or whether external advice should be obtained after all. An example mentioned during the conference was that the Dutch Oil Company (de Nederlandse Aardolie Maatschappij B.V.) at the time had asked its own engineers to advise on whether gas production would lead to earthquakes in Groningen. The advice from these engineers was that it would not be the case. That turned out to be different after all, and the advice of these engineers was mainly biased by self-interest. A General Counsel as moral process monitor should acknowledge these aspects in time, engage in discussions about them and/or seek external and independent advice.
On the flip side of the discussion on the General Counsel as (moral) process monitor is the argument that the General Counsel should not lose track of the bigger picture. In doing so, it is possible that a restructuring process may be disadvantaged on an individual level. You cannot make an omelette without breaking eggs. In addition, a General Counsel should avoid delays by trying to monitor too much. All in all, the General Counsel has a challenging role as an octopus in an (unforeseen) crisis.