Restructuring trends 2020 – a global view

In this, the third edition of PwC’s Restructuring trends: A global view, we explore the business challenges and public policy responses that are shaping market activity in 37 economies worldwide.

The report draws on the expert local insights of our restructuring advisers and insolvency practitioners, who outline how governments and businesses have responded to the economic upheaval, how they expect the next 12 months to play out and the priorities for restructuring ahead.

In the face of continued uncertainty, the analysis in our report underlines the vital importance of proactive and decisive action by corporates and restructuring practitioners.

Getting on the front foot will not only stabilise businesses in the short-term, but also help them gear up for longer term shifts in technology, customer expectations and international trading arrangements. Conversely, waiting until the lifeline of government support is withdrawn could significantly reduce the options available and increase business vulnerability. Please download the full report to find out more.

Key themes

Government support holds back insolvency and restructuring activity, for now
Restructuring activity is set to pick up
Insolvency moves back onto the agenda
Pressure on GDP underlines the need to adapt now and future-proof the business for the shifts ahead

Government support holds back insolvency and restructuring activity, for now

Government support has held down insolvency rates. It would also appear to have eased the pressure to restructure and turn around troubled businesses, including those that were struggling before COVID-19. But governments can only afford to foot the bills for so long.

Restructuring activity is set to pick up

As government support is withdrawn, we expect restructuring activity to pick up. The immediate priorities include repairing the balance sheet and dealing with the debts accumulated during lockdown. With revenues subdued and margins tight, there will also be pressure on businesses to eliminate waste, drive down costs and refocus resources on growth.

Insolvency moves back onto the agenda

Insolvency activity has been curtailed through much of Q2 and Q3, largely as a result of government support and restrictions on legal action. There are a few exceptions to this. The USA is the most obvious one, as Chapter 11 provides the framework and protection to help with restructuring of operations.

In general, insolvencies are expected to increase in Q4 2020 and into 2021, especially for those companies that operate in heavily COVID-19-affected industries that may take much longer to recover, as well as for those that have yet to adapt their operations to the new environment.

Pressure on GDP underlines the need to adapt now and future-proof the business for the shifts ahead

The key focal points for the coming round of restructuring include repairing the balance sheet and creating the foundation of a healthy medium- to long-term recovery. Crucially, there will be opportunities to make the most of rapidly developing restructuring regimes, which provide new tools to work through the issues created by the crisis.

At the same time, the pandemic looks set to accelerate longer term shifts in the economy. This ranges from the move to digital retail to strengthening sustainability. Corporate restructuring can help companies to boost strategic agility and future-proof their business models by simplifying their structures, clearing away non-core operations and freeing up funds for investment.

As part of a deals-led recovery, the plentiful dry powder ready for investment by private equity is set to play a key role in enabling businesses to keep pace with fast-changing customer demand and seize the opportunities ahead.

How we can help

Whether you’re a corporate, creditor, sponsor or other stakeholder with a financial interest in a company, we can help you to protect and enhance value now and prepare for the changes ahead.

Our global and local expertise not only includes restructuring and insolvency, but also in-depth knowledge of the trends reshaping different sectors. We’re also marked out by our ability to offer a full range of support in key areas such as strategy, tax, pensions and operational efficiency.

Our approach is built around proactive action to help maximise options and open up a clear path to recovery. We create a joined-up response, both in our package of support and in helping stakeholders such as management and creditors to develop collaborative solutions.