Corporate Restructurings Set to Accelerate Over the Next Two Years
01 July 2024 - 1:00PM
Business Wire
- Over 80% of industry experts expect volume of restructurings
to continue rising
- Regulations favoring liquidation over rehabilitation seen as
biggest challenge, with survival further hampered by inexperienced
management teams and rising interest rates
- North America and Europe experiencing significant
restructuring
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 study1, 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.
“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,” says Michelle Dreyer, managing
director of CSC’s Global Restructuring Practice.
“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,” Dreyer adds. “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.”
Two-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.
“Many individuals in management have little or no experience in
dealing with the challenges of a systemic downturn,” adds Dreyer.
“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.
“Regulatory changes can also have a positive impact on
restructuring and make certain jurisdictions more attractive,
resulting in the high use of COMI shifts,” says Dreyer. “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.”
To receive a copy of CSC’s Global Restructuring 2024 report,
please contact Camilla Wyatt or Saffron Wainwright at
cscteam@citigatedewerogerson.com.
Notes to editors 1CSC, in partnership with Pure Profile,
surveyed 150 senior executives in the financial services, legal,
private credit, and private debt sectors globally to gauge views on
the state of the global restructuring industry. Respondents were
equally split between North America, APAC, U.K., and Europe.
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than 90% of the Fortune 500®, more than 90% of the 100 Best Global
Brands (Interbrand®), and more than 70% of the PEI 300. We are the
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for more than 125 years. CSC has office locations and capabilities
in more than 140 jurisdictions across Europe, the Americas, Asia
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version on businesswire.com: https://www.businesswire.com/news/home/20240701938743/en/
Citigate Dewe Rogerson Camilla Wyatt or Saffron
Wainwright cscteam@citigatedewerogerson.com
CSC Brandy Chieffi Vice President of Marketing
brandy.chieffi@cscglobal.com CSC News Room