Reno’s extraordinary meeting and the demand to remove the whole board (2020)

Who should rebuild a company in crisis

What this fight asked was who ought to hold the initiative in a company in crisis — the large shareholder or the incumbent management. Reno came with sharp-edged prescriptions, carving out the leasing business and replacing the entire board, and tried to intervene through the front door of a shareholders’ meeting. Against that, cleaning up after the construction defects required patient coordination with the regulators and could not proceed without the trust of the apartment owners who carry the business. That the drastic remedy of dismissing every director found no takers among the other large shareholders, and that owner-shareholders pushed back, suggests that governance in a crisis does not move on short-term sharpness alone.

Management being confirmed in office does not, by itself, vouch for the correctness of the rebuild. Having seen off Reno, the same management could not clear the crisis under its own power either, and got through the emergency by accepting the capital of another investment fund, Fortress, and a heavy interest burden with it. In the course of repelling an activist and then being absorbed into the logic of outside capital anyway, there remains the implication that the confrontation did not exactly preserve managerial independence. The question of whose hands should rebuild a company in crisis does not close on a single win or loss.