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The bankruptcy and restructuring arena has been a relatively stable environment over the past 12 months, with activity levels across the globe on the low side, broadly-speaking. In a number of jurisdictions, the UK, Germany, Portugal, Austria, Norway, Denmark and Australia among them, the number of distressed companies filing for insolvency and restructuring has indeed fallen, due, in part, to financing options and the increasing availability of alternative lending. Low interest and inflation rates have also played a part in helping companies experiencing difficulties.

UNITED STATES

Richard H. Golubow

Winthrop Couchot PC

“There has been a recent increase in corporate bankruptcies filed in the US. Nationwide, total corporate bankruptcies slightly increased in Q1 2016 as March 2016 was the busiest filing month since April of 2014 and it marked the fourth straight month where we saw an increase in filings. The Q1 2016 filing figure represents a 23 percent increase over Q4 2015. After declining for several consecutive years following the recession in 2008, business bankruptcies started flattening out in Q3 2014 and had been fairly consistent until the recent increases. Small businesses continue to dominate the bankruptcy count, with nearly 77 percent of Q1 2016’s corporate bankruptcies filed by companies with $2.5m or less in gross sales, and nearly 65 percent of Q1 2016’s corporate bankruptcies filed by companies with less than 10 employees. There were 27 publicly traded corporate bankruptcies filed in Q1 2016, a slight increase from the 26 publicly traded corporations that filed for bankruptcy in Q1 2015.”

BRAZIL

Luis Vasco Elias

Deloitte Brazil

“Looking at the past 18 months, we have seen a significant number of bankruptcies and requests for judicial recovery due to issues in both domestic and foreign markets. Internally, macroeconomic fundamentals used by the government in this period contributed to the weakening economy. Externally, low commodity prices hurt the export sector. This challenging economic environment affected companies that failed to review their business processes or to capitalise. In short, they were unable to respond quickly to these changes in the economic environment.”

BRITISH VIRGIN ISLANDS

Russell Crumpler

KPMG

“The British Virgin Islands (BVI) are somewhat unique. With over 500,000 active companies, which are generally established to provide efficiencies within corporate structures, holding entities for specific assets and gateway entities for inward investment into other jurisdictions. Historically, Asia has been a particular focus. The number of applications for insolvency is very dependent upon macroeconomic factors elsewhere. With significant pressure on oil & gas prices, together with a marked slowdown in Chinese growth, we expected a significant rise in the number of BVI insolvency filings. However, the number of filings in 2015 was relatively steady. Focusing on the BVI itself, one of its many strengths is a respected and internationally recognised Commercial Court with an effective insolvency regime providing stakeholders with established statutory mechanisms upon which to seek enforcement of their rights. Our Commercial Court remains very active, with additional temporary judges sitting as required to ensure timely and effective service.”

UNITED KINGDOM

David Bryan

BM&T LLP

“Statistics published for Q1 2016 show creditors voluntary arrangements (CVAs) at their lowest level since Q1 1998 and administrations at their lowest level since Q4 2003. There has been a small rise in some other forms of insolvency. With low inflation, interest rates remaining very low and reasonable economic growth, there’s no reason to think that is likely to change any time soon. In addition to low interest rates, there is plentiful financing and an increasing amount available from alternative lenders. Most businesses have adjusted to this new normality and for those that do get distressed, consensual restructuring remains the first choice solution before formal insolvency processes are considered. It remains a quiet market for formal insolvency work.”

FRANCE

Olivier Marion

PwC

“France has experienced a progressive recovery in its economy over the past 12 to 18 months, and 2016 is now expected to achieve 1.6 percent GDP growth. In 2015, the number of failures and bankruptcies remained stable compared to the prior year, at close to 66,000 companies, and 2016 should see a limited reduction in this number. That said, several industry sectors continue to suffer. While we see fewer LBO structures in distress, more corporate groups are currently suffering, and rather aggressive financing structures are being put in place on new LBO transactions. As a result, we may well prepare for new waves of restructuring transactions over the coming years.”

PORTUGAL

Helena Soares de Moura

Morais Leitão, Galvão Teles, Soares Da Silva & Associados

“Portugal still faces the effects of the financial crisis, which is quite clear in the number and length of insolvency and restructuring proceedings. In Portugal, companies face a shortage of liquidity and access to funding which led to a considerable increase of insolvency proceedings up to 2013. In 2014 and 2015 there was a slight reversion of this trend. In fact, the filing of restructuring and insolvency proceedings has slightly decreased.”

SWITZERLAND

Peter Dauwalder

KPMG

“Following the peak of bankruptcy filings for companies in 2013, new insolvency cases in 2014 decreased noticeably. With an increase of 14 percent compared to 2014, this trend clearly reversed in 2015, which reflects the current general business climate since the abandonment of the euro cap by the Swiss central bank (SNB). Insolvencies in 2015 were slightly lower than the peak in 2013, while incorporations of new companies simultaneously decreased slightly from 2014 to 2015. This trend seems to be continuing, as from January to April 2016 insolvencies increased by 9 percent compared to the same period last year.”

GERMANY

Peter Wiegand

KPMG

“In the last 18 months, the restructuring and insolvency market in Germany has been very quiet. At the beginning of 2016, when financial markets experienced some turbulence, the market was already expecting the next crisis. These expectations turned out to be wrong. Despite some smaller restructurings, especially in the automotive sector, 2016 has been as quiet as previous years. Ongoing problems can be observed in the German bond market for small and medium sized companies, so-called Mittelstandsanleihen, with a number of issuers facing significant refinancing problems, as their operating performance is still insufficient to cover interest payments typically ranging between 6 and 9 percent.”

AUSTRIA

Dr Edmund Roehlich

Proksch & Partner Rechtsanwälte OG

“Six years after the financial and economic crisis which caused a peak of bankruptcy filings in Austria, the amount of business failures is at an 11 year low and continues to decline. In 2015, the number of Insolvencies dropped around 5 percent in comparison to 2014, but the insolvency of one considerable retail chain caused a 5 percent increase of the affected employees. However, the first quarter of 2016 did not continue this trend. Statistics of the first quarter show an increase of more than 10 percent in bankruptcy filings compared to the first quarter of 2015. If this trend continues, the number of insolvencies will reach the level of 2014.”

DENMARK

Boris Frederiksen

Kammeradvokaten

“The economy in Denmark has been improving at a modest pace in 2015 and 2016. In 2015, this was reflected in the falling number of bankruptcies and in-court restructurings compared to earlier years. So far, 2016 has been characterised by a considerable increase in bankruptcy petitions, due to various reasons, but primarily that the Danish tax authorities in 2016 initiated collection and recovery of due taxes and VAT after a long period in which the collection had been affected by IT problems in the IT based collection system put into operation in 2013. Consequently, the number of bankruptcies in the segment of small and medium-sized enterprises is expected to increase in 2016 compared to 2015.”

NORWAY

Hege Merete Oftedal

Advokatfirmaet PWC

“Norway as a whole has experienced a decline in the number of bankruptcies during the last year. However, in the oil & gas and offshore vessel clusters in Hordaland and Rogaland, the number of bankruptcies has surged over the last few months. The number of bankruptcies has increased by 48 percent and 21 percent from last year, for Aust-Agder and Hordaland respectively.”

AUSTRALIA

Derrick Vickers

PwC

“Over the last 12 to 18 months in Australia, we have seen a reduction in the size and number of corporate insolvencies, continuing a trend that started in 2013. During this period, appointments by secured lenders as a proportion of total insolvencies have also decreased. Personal bankruptcies have been falling over the last few years, with 2015 reporting the lowest level of filings since 2006. In terms of affected industries, mining services, mining and retail have seen marked declines in financial performance. Generally, we are observing a growing number of small business failures as a result of unsecured creditors petitioning the court for orders to wind up debtor corporates. Also, the last six months has seen a few significant insolvencies in the retail industry and base metal refineries.”

CONTRIBUTORS

Advokatfirmaet PWC

BM&T LLP

Deloitte Brazil

Kammeradvokaten

KPMG

Morais Leitão, Galvão Teles, Soares Da Silva & Associados

Proksch & Partner Rechtsanwälte OG

PwC

Winthrop Couchot PC