the November 2009 Issue in PDF Format - Trade Show Executive

“The way bankruptcies go these days,
there is usually a pre-conceived plan drawn
up before the filing,” said another source.
“In the old days, companies would often go
from Chapter 11 to Chapter 7 liquidation.
Now they go into Chapter 11 almost as a
planned way to pull the rug out from under
their obligations and not skip a beat on the
operations side.”
Jonathan Howe, the president/
founding partner with the Chicago law
firm Howe & Hutton, Ltd., agreed that
bankruptcy doesn’t have the stigma it
used to have. “It allows you to shed
some of your more onerous obligations,”
Howe said. “It helps clear the slate.”
On the other hand, bankruptcy
proceedings are not to be confused
with a gentlemanly Mulligan on the
golf course. Management must deal
with its situation, Howe said, and make
some amends to the company’s backers.
“Reorganization is for the benefit of the
creditors,” said Howe. “They will have
to come up with a reorganization plan
that allows the business to continue.
But that also raises the question of
who is running the company: current
management or their lenders?”
Bending, but Not Breaking
Since a change in the company’s
immediate environment is what caused
the trouble, it is unlikely that business
will continue exactly as it had. Analysts
agreed the best outcome to any
restructuring is one in which business
relationships among the company, its
suppliers and customers bend slightly,
but never break. “The only option they
have is to restructure or go into Chapter
11, and that’s where heads get banged
together,” one source said.
Trade show organizers differ from
most companies. Their events occur during
specific dates and are scheduled far in
advance, when the economy should be well
into recovery. “However, courts generally
deal with the here and now,” said Howe.
How will bankruptcy impact the
relationships between restructuring
companies, their vendors and their
exhibitors? Here is a look at some
possible outcomes:
• Relationships with vendors.
Contractors will likely bear the brunt
of a bankruptcy. Sources said it was
unlikely any unpaid balances would
be enough to drag under any but the
smallest contractors. Given the limited
scope of the exhibition industry, it
is unlikely that the two parties would
“
Analysts agreed the best outcome to any
restructuring is one in which business
relationships among the company, its suppliers
and customers bend slightly, but never break.
”
be able to part ways permanently.
Organizers need the contractors to
bring the show to life, but contractors
also need the organizers. Sources expect
some restructurings and bankruptcies
to result in some contractors forgoing
short-term revenues in exchange for
longer-term contracts. “None of the
suppliers will be required to continue
doing business with a show organizer.
However, they might consider cutting
the organizer a break this year because
they will get longer-term business,” a
source said.
• Relationships with venues.
Relocating a major show to a less
expensive city runs into the issue
of cancellation fees. It also raises
marketing questions since the venue
can play a critical role in whether or
not an attendee or exhibitor takes part.
“If I planned to exhibit in City A, but
now the show will be in City B, I won’t
do as well in the city that has less
appeal to attendees,” Howe said.
• Relationships with exhibitors.
Deposits paid by exhibitors are a
potential problem for organizers in
bankruptcy. The money received
prior to the bankruptcy petition could
become part of the company assets.
“Exhibitor contracts are an asset,” said
Howe. “But exhibitor contracts are also
contracts to be performed.” Another
source said that status could mean
the deposits are used to pay creditors
immediately rather than to bankroll
the show. “They will probably work to
defend those funds in court, but the
court could tell them to take a hike. The
exhibitors paid in and are in the same
boat as everyone else,” the source said.
The reorganization of some of the
trade show industry’s most respected
names is also being played out against
a backdrop of uncertainty about the
future. The integrated media approach
appears to be a logical strategy that
goes beyond merely selling floor space
and sponsorships. However, the sag
in the economy hit companies in their
attendance and advertising streams just
when they were getting off the ground.
Faith in the future of the business
will likely be an important area of
emphasis – particularly when organizers
present new strategies to their creditors
and, if necessary, a bankruptcy judge.
Sources told TSE that the key will be
for organizers and suppliers to remain
focused on the big picture. “These
companies rely on one another for their
business,” said one source. “We’re all in
this together.”
Reach Jonathan Howe at (312) 263-3001
or jth@howehutton.com; Jon Leibowitz at
(617) 219-8300 or jleibowitz@questex.com;
Joe Loggia at (818) 593-5000 or jloggia@
advanstar.com; other sources who requested
anonymity
www.TradeShowExecutive.com Trade Show Executive November 2009 19