Emergence plan

Emergence plan is a type of reorganization plan after the company declared bankruptcy. If the company wants to exit bankruptcy status it should prepare emergence plan which will restore financial liquidity, remove problems and open it to new opportunities. Such a plan is accepted by bankruptcy court.

Purpose of emergence plan is preparing organizational and technical solutions focused on providing continuity of essential processes, which being realized in company or organization in case of crisis contingency. The main goal of emergence plan adhibition is reinstate previous operational efficiency as fast as it is possible. Emergence plan should minimalize damages connected with contingency having negative impact on proper functioning of organization or company. Proper preparation of emergence plan can provide security and stability of the organization or company.

Emergence plan in strategic planning

Emergence plan has also wider meaning in strategic planning. In strategic planning term emergence is related to opportunities that emerge in company environment. But to utilize opportunities the company has to be prepared, it has to create the conditions that will enable using them. The emergence plan describes what conditions, when, why and how should be created in order to utilize potential opportunities in the company.

Developing the emergency plan

Article on the "Ready.gov" side describes: "Developing an emergency plan begins with an understanding of what can happen. Review your risk assessment. Consider the performance objectives that you established for your program and decide how much you want to invest in planning beyond what is required by regulations. Document available resources. Determine whether external resources have the information they would need to handle an emergency. If not, determine what information is required and be sure to document that information in your plan. Prepare emergency procedures for foreseeable hazards and threats.Develop hazard and threat specific procedures."

Every emergence plan should contain

Every emergence plan (irrespective of size or type of organization/company operations) should contain:

• Direct procedures in case of emergence causing danger or losses
• Directions of actions for the sake of providing proper functioning of the organization/company
• Procedures of actions leading to restoring state before the emergence

Research clearly proves that proper preparded emergency plan usage can provide adequate level of safety and stability.

Example

Let's assume that a major part of the company employees travel by airplane which due to accident gets crashed. The company might got dramatically charged or even ruined due to this kind of loss. According to that, many companies dispose certain procedures in case of emergency. A plan can also include typical strategies to minimalize potential dramatic impact of the emergency, such as requirements of separate travelling or limitation of the employees which are able to travel at once in one airplane.

Cantor Fitzgerald, the financial company, is the perfect example of emergency plan implementation. During the two hours company lost 658 employees from 960 and large part of offices and trading objects due to September 11 attacks. Despite of catastrophe and dramatic losses, a company was able to resume activity in a week. Today it is the successful company

Advantages of Emergence plan

An emergence plan has several advantages, including:

• It allows businesses to reorganize their financials and operations in a way that will restore liquidity and profitability.
• It allows companies to reduce their debt and restructure their operations in order to become more efficient.
• It can open the door to new opportunities, such as mergers, acquisitions, or new investments.
• It can provide a framework for a company to return to profitability and increase its value.
• It can improve the company's relationship with creditors, investors, and other stakeholders.
• It can improve the morale of the employees and help them to understand the company’s financial situation.

Limitations of Emergence plan

An emergence plan is a way for a bankrupt company to exit bankruptcy status, however there are some limitations to be aware of:

• Cost: As the company works to restructure itself, the emergence plan can be expensive, requiring a large amount of money to be invested in order to regain financial liquidity.
• Time: It can take a substantial amount of time for the plan to be fully implemented, and for the company to exit bankruptcy.
• Complexity: Emergence plans can be complex, requiring the company to make tough decisions regarding their finances, debt restructuring, and other changes.
• Legal: It is important that the emergence plan is legally compliant, as it must be accepted by the bankruptcy court in order to be implemented.
• Change: The emergence plan will likely require changes to be made to the company’s operations and structure, which can be difficult for some employees and shareholders to accept.

Other approaches related to Emergence plan

An emergence plan is not the only approach that can be taken after a company has declared bankruptcy. Other approaches may include:

• Negotiated settlement: A negotiated settlement is a type of agreement between creditors and debtors that allows the company to restructure its debt and avoid bankruptcy. This approach is often used to avoid the court process and can help reduce costs for the company.
• Asset sale: Asset sale is a restructuring option where the company sells off some of its assets in order to raise funds to pay off debts. This approach can help the company avoid bankruptcy and can also help it focus on its core operations.
• Debt restructuring: Debt restructuring is a process where the company renegotiates the terms of its debt with creditors to reduce overall debt levels. This approach can help the company avoid bankruptcy and can also help it reduce its overall debt burden.

In summary, emergence plan is one of the several approaches that a company can take to reorganize its debt and operations after bankruptcy. Other approaches may include negotiated settlement, asset sale, and debt restructuring.

Emergence plan — recommended articles

Business risk management — Crisis in the enterprise — Credit management — Business plan — Capital restructuring — Strategic risk management — Self insured retention — Principles of financial planning — Net line

References

• Contingency plan @ Wikipedia
• (2018) Emergency Response Plan, Department of Homeland Security
• Mintzberg, H. (1994). The fall and rise of strategic planning. Harvard business review, 72(1), 107-114.
• Swanson M., Bowen P., Phillips A. W., Gallup D., Lynes D.(2010) Contingency Planning Guide for Federal Information Systems

Footnotes

Author: Martyna Miszczak