The U.S. corporate bankruptcies have hit the highest levels since 2016, highlighting financial turmoil and market challenges across industries. One of the core strategies to avoid bankruptcy is initiating business restructuring. However, restructuring itself is a highly complex and stressful process that often requires efficient collaboration tools.
Among these, virtual data rooms (VDRs) stand out for making bankruptcy and restructuring activities more efficient, cost-effective, and secure. This article explores the benefits of using VDRs for these processes. So keep reading to learn the following:
- Two powerful VDR capabilities for restructuring management
- Three ways VDRs accelerate restructuring processes
- Six benefits of virtual data rooms for bankruptcy and restructuring
What is a VDR in bankruptcy?
VDRs are bankruptcy and restructuring solutions where businesses manage critical data and collaborate securely. VDRs offer powerful capabilities to streamline bankruptcy processes, where time efficiency and cost control are critical.
Efficiency
A virtual data room offers centralized, 24/7 secure access to restructuring data, allowing stakeholders to collaborate efficiently on bankruptcy filings, restructuring plans, disclosure statements, and other legal documents.
Unlike physical data rooms, online data rooms do not place restrictions on time, location, or capacity, enabling users to make informed decisions anywhere, anytime. This capability helps companies simplify document management, meet tight deadlines, and develop actionable restructuring plans.
Security
Restructuring creates a lot of “data debris,” increasing data breach risks, which can be devastatingly expensive — averaging $4.88 million per incident.
“Restructuring often exposes caches of data, so while they are fresh in everyone’s mind, now is the time to plan for defensible disposition.” Redgrave LLP law firm.
Using a virtual data room for restructuring enables you to secure sensitive data and effortlessly remove data debris. Thus, VDRs enable secure document storage for bankruptcy cases — all data is encrypted at rest and in transit. Also, you can automatically detect and remove sensitive information from selected documents and withdraw access to shared and downloaded materials.
How does a virtual data room accelerate restructuring?
Let’s explore how companies can boost efficiency with VDRs, solve the main restructuring challenges, and accelerate the process.
Eliminate process delays
Without a structured process and clear workflows, bankruptcy filing and restructuring can extend beyond 12 months, slowed by process delays, organizational chaos, and pressure from stakeholders, shareholders, and media (more so in publicly traded companies).
Such inefficiencies often aggravate when a company attempts to overcome challenges during the due diligence process and establish new communication channels before restructuring.
✔️ Solution: Data rooms substantially accelerate due diligence and restructuring processes. A VDR ensures a role-based communication flow between management teams, creditors, stakeholders, and shareholders. It serves as a central collaboration hub, streamlining input from stakeholders and improving the efficiency of communications.
Remove document management inefficiencies
Business reorganizations typically involve extensive document reviews, inventory audits, and financial forecasts. In the wake of uncertainty, managers feel overwhelmed with the amount of documents to be scanned, digitalized, reviewed, redacted, or standardized. That can be an administrative nightmare.
“The CSC’s restructuring experts found that management teams often have a difficult time transitioning from “normal company operations” to those needed in a bankruptcy proceeding,” said Michelle Dreyer, Jordina Walker, and Giles Abbott at CSC.
✔️ Solution: VDRs offer automatic document indexing, bulk document actions, automatic file conversions, and optical character search, speeding up bankruptcy processes. Users can upload entire folder structures and instantly convert 25+ file formats into standardized PDFs.
Improve collaboration
The most successful restructuring plans are typically developed with clear collaborative strategies and significant time for preparation. This process often requires the coordination of hundreds of stakeholders, alongside creditors and legal professionals, which is challenging.
“Trying to align debtor and creditor expectations with an eye towards compromise against significantly accelerated timelines requires tenacity and focus,” said Rusty Wiley, CEO at Datasite.
✔️ Solution: VDR collaboration features like Q&A workflows, FAQs, discussion boards, and instant notifications facilitate real-time collaboration between debtors, creditors, internal teams, and financial advisors. Moreover, with application programming interfaces of some data rooms, companies can enhance collaboration tools already in use, such as when integrating secure access capabilities into traditional workspaces.
Top 3 data rooms
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Six benefits of virtual data rooms in restructuring
Let’s explore the key benefits of using virtual data rooms for bankruptcy and restructuring management:
- Robust document security
- Efficient collaboration features
- Automated document management
- Unparalleled accountability
- Efficient data security compliance
- Data management cost savings
Robust document security
Virtual data rooms ensure secure document management for bankruptcy processes. Companies that use virtual data rooms enjoy robust protection against business email compromise (BEC), phishing, and credentials theft — the most expensive and frequent attack vectors, according to IBM’s 2024 Cost of a Data Breach Report.
However, there is more security value to using VDRs than reducing the most popular attack vectors. Let’s explore more details into how VDR features optimize document security and minimize data breach risks.
| Data security feature | Value | Protection against an attack vector |
| AES 256-bit data encryption | Ensures that data at rest and in transit is encrypted, making it impossible for unauthorized parties to access information | Data interceptionDistributed denial-of-service attack (DDoS) |
| Two-factor authentication | Requires users to provide an additional form of verification before accessing the data room | Credentials theftPhishingSocial engineeringBEC |
| Granular user access permissions | Restricts access to files and folders based on user roles | Malicious insiderCloud misconfigurationUnauthorized file sharing |
| IRM (information rights management) security | Retains access restrictions when files and folders are saved locally on user devices | Accidental data lossSolen deviceMalicious insider |
| Network restrictions | Limits access to virtual data room to whitelisted IP addresses and domains | Credentials theftSocial engineeringPhishingBEC |
| Secure document access permissions | Restricts viewing, downloading, editing, printing, and other actions on the document level | Human errorMalicious insiderBECCredentials theftAccidental data lossStolen device |
| Dynamic watermarking | Automatically adds watermarks with access logs to files | Malicious insider |
| Session timeouts | Automatically logs users out after a period of inactivity | Unauthorized access from unattended sessions |
| Single-sign-on (SSO) | Allows users to log into the data room using a secure set of credentials generated by the SSO provider, reducing password fatigue and minimizing attack surfaces | Credentials theftPhishingBEC |
Efficient collaboration features
Virtual data rooms enable many features that streamline and clarify collaboration and give real-time access to critical info during restructuring.
| Collaborative feature | What you can do | Impact on bankruptcy and restructuring |
| User groups and roles | Distribute stakeholders across user groups with well-defined roles and permissions | Enhances the clarity of processes and improves accountability |
| Automated Q&A workflows | Auto-forward questions from stakeholders to coordinators, subject matter experts, and approvers | Improves stakeholder communication. Helps to resolve queries quickly and control the information flow between internal stakeholders, creditors, advisors, and regulators |
| FAQ sections | Create a dedicated section for commonly asked questions and concerns | Minimize repetitive queries, improve collaboration outcomes, and maintain a professional identity |
| Custom Terms of Use | Prompt stakeholders to accept your company’s Terms of Use before accessing your VDR workspace | Clarifies and emphasizes stakeholder responsibilities during restructuring |
| Notes and comments | Create private, public, and group notes in files and folders | Allows for capturing insights, opinions, and ideas during collaboration |
| Cross-project user management | Add, browse, search, and delete users across projects | Accelerates project onboarding and allows for managing many stakeholders at once |
| Corporate branding | Customize the appearance of your VDR interface to reflect your brand identity | Reinforces your corporate identity and professional image |
Automated document management
Virtual data rooms provide powerful capabilities to automate document management during restructuring. Let’s explore the value of VDR data management features below.
| Data management feature | What you can do | Impact on bankruptcy and restructuring |
| Unlimited data storage | Store and bulk-upload unlimited files | Allows for managing bankruptcy filings and restructuring materials without worrying about storage and file size limits and associated process disruptions |
| Automatic index numbering | Automatically update reference numbers of files and folders | Relieves managers from updating the data index manually and helps with referencing and locating files |
| Data index upload | Upload an entire project structure from a local device, FTP, or external storage | Drastically simplifies data migration and new project setups |
| Automatic file conversion | Convert over 25 file formats into scannable, searchable, and redactable PDFs | Ensures accessibility and compatibility of data among various VDR users |
| Automatic file redaction | Automatically identify and bulk-redact sensitive information in documents before sharing | Relieves the burden of cumbersome and time-consuming document preparations for data security and privacy compliance |
| Optical character recognition (OCR) search | Search for content in scanned documents and images | Makes it much easier to locate and retrieve data from scanned documents |
| Bulk workspace actions | Bulk rename, delete, and copy files across projects | Reduces administrative effort during document management |
Unparalleled accountability
According to McKinsey, accountability improvement is among the top five reasons for organizational redesign, a key part of the restructuring process. Using virtual data rooms can substantially improve accountability in your organization, particularly during the restructuring process, when stakeholders are expected to produce the best results in the shortest time. Let’s explore how VDRs enhance accountability:
- Full audit trail. VDRs log all actions performed inside the workspace (over 70 trackers), providing accurate record keeping and giving you a bird’s eye view of stakeholder performance and project progress.
- User behavior tracking. Understand how VDR users (like creditors and regulators) review bankruptcy filings and restructuring plans. You can monitor page views, downloads, logins, etc.
- Color-coded reports. Visualize user activity and project performance with color-coded heat maps, graphs, and charts.
- Scheduled reporting. Configure the frequency, scope, and format of auto-generated VDR reports. Maintain audit logs for disclosures, regulatory audits, and internal decision-making.
- Custom reports. Some VDRs develop custom reporting functionality upon your request, tailored to your project’s specific needs.
Efficient data security compliance
The U.S. data privacy and protection laws will become more fragmented in 2025-2026. For instance, Delaware, Indiana, Lowa, Kentucky, Maryland, Minnesota, and Nebraska, will adopt new data privacy legislation in the next few years.
Strict data usage and complex disclosure requirements increase liability risks for companies undergoing restructuring, particularly when using data management tools during operational reorganizations.
Leading virtual data rooms certified with ISO 27001, ISO 27017, ISO 27018, ISO 9001, CCPA, HIPAA, PCI DSS, and GDPR, provide a compliant environment for managing confidential documents during restructuring in various industries. They make it simpler for companies filing for bankruptcy to meet security control requirements under new privacy regulations.
Data management cost savings
Reorganizational activities can be costly, ranging from initial filing fees and legal counsel services to actual restructuring expenses. For instance, General Motors spent around $1.3 billion to restructure itself and unlock about $6 billion in cost savings. Given the significant financial investment, a company should act with maximum efficiency to reap the most benefits from its restructuring efforts.
In the traditional setting, however, cost-reduction efforts can be compromised by inefficient processes, such as manual data entry, fragmented systems, or even physical data rooms.
VDRs facilitate companies in eliminating physical data rooms and digitizing document management processes. This factor alone can substantially reduce restructuring costs associated with data management.
There is no need for physical document storage, printing, delivery expenses, travel and scheduling costs. Cost savings with VDRs can also be achieved with automated workflows and AI capabilities that minimize administrative burden and human error risks.
Case study: Panasonic
Panasonic, Japan’s multinational electronics company, used Intralinks data room in 2021-2022 to support legal restructuring efforts. Panasonic became a holding company and underwent a complex process of converting its departments into subsidiaries.
During the restructuring process, Panasonic needed to share voluminous video files with several parties involved, often overseas and across multiple factories. The original decision was to use DVDs. Upon further consideration, Panasonic adopted Intralinks virtual data room to share video files and distribute information across different parties securely and efficiently.
“This platform allows you to share a large volume of video data at a low cost, and we also liked how it allows you to set viewing restrictions,” said an anonymous Panasonic manager when describing the benefits of using Intralinks VDR.
Case study: EW Scripps Company
EW Scripps, a sizable American TV broadcaster, used iDeals virtual data room to execute the restructuring process and divest distressed assets. Scripps sold 34 radio stations, reduced operating expenses, and streamlined its workforce as part of its restructuring plan to achieve $30 million in annual cost savings.
“The enterprise-wide restructuring positions us well for continued growth while maintaining high-quality journalism as our central focus,” said Adam Symson, Scripps President and CEO.
One of the key challenges for Scripps was controlling data access across stakeholders and bidders in asset sales. With iDeals virtual data room, Scripps secured confidential communications with multiple bidders and managed a comprehensive Q&A room for various stakeholders. Scripps teams also benefited from system-wide reports and deliverable VDR archives for record-keeping and regulatory compliance purposes.
“It’s really easy to track usage and archive the materials, we need to be able to keep an exact copy of each data room,” said Marc Loeffer, Senior Program Manager at Scripps, when managing restructuring archives.
Bottom line
- Virtual data rooms ensure efficiency and security during corporate restructuring. VDRs help companies collaborate in centralized workspaces and secure controlled access to confidential information.
- Virtual data rooms eliminate process delays, remove document management inefficiencies, improve collaboration, and reduce data management costs.
- Key benefits of using VDRs are data security compliance, automated document management, detailed activity reporting, and role-based workflows.
Compare the top 15 virtual data room providers and choose the best data room to facilitate bankruptcy and restructuring at data-rooms.org.