The volume of new corporate restructuring mandates is set to continue rising over the next two years as distressed companies grapple with geopolitical uncertainty, tightening interest rates, and new regulatory challenges, according to new research commissioned by CSC, the world’s leading provider of global business administration and compliance solutions.
CSC’s study, ‘Global Restructuring Trends in 2024: Navigating the Opportunities and Challenges’, reveals that the overwhelming majority (83%) of sector professionals expect to see the volume of restructuring mandates grow significantly or modestly over the next two years, with a quarter (25%) predicting a significant increase.
CSC commissioned research among 150 independent senior executives in the global financial services, legal, private credit, and private debt sectors to shed new light on what’s driving the rise in global restructurings, as well as challenges facing the industry, and key regional differences.
Commenting on this, CSC’s global restructuring practice managing director, Michelle Dreyer, said: “The acceleration in global restructurings builds on the rise we’ve seen over the past 12-24 months. In the U.K., for example, there were more than 25,000 registered company insolvencies in 2023, the most for 30 years.
“We’re seeing a number of companies that took on a considerable amount of debt during COVID and are now seeing that debt come due. But as rates are now so much higher, they can’t just go to their lender or a different lender and refinance.
“Some restructurings are actually companies that probably should have filed in 2020, but because they were so bolstered by the cheap money in the market, they’ve been able to hold out until now. We’re now seeing the aftermath of all that inexpensive money.”
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataTwo-thirds (65%) of industry experts said the biggest challenge to restructuring distressed companies was overcoming regulatory hurdles, which at times favors liquidation rather than rehabilitation. Other key challenges are inexperienced management teams (cited by 55% of respondents), which are unaccustomed to the transition from normal company operations to a very different and complex bankruptcy environment. Some 40% of respondents highlighted rising interest rates as a major driver in the restructuring market.
Dreyer added: “Many individuals in management have little or no experience in dealing with the challenges of a systemic downturn.
“Management teams often have a difficult time transitioning from normal company operations to what is needed in a bankruptcy proceeding, meaning that the support of experienced providers who can move quickly to assist them becomes hugely valuable.”
CSC’s study identified North America and Europe as the two regions witnessing the most significant volumes of restructuring activity. Over 40% of those surveyed selected these geographies, with their mature regulatory frameworks making them attractive to companies from beyond their own borders.
Dreyer concluded: “Regulatory changes can also have a positive impact on restructuring and make certain jurisdictions more attractive, resulting in the high use of COMI shifts.
“Only a very small minority said they use just one independent external vendor during restructuring processes, highlighting the difficulty of finding a one-stop-shop during what are exceptional times for management teams. At CSC, we provide expertise from highly experienced professionals across a variety of products and a truly joined-up, global cross-border service.”
