Bankruptcy & Restructuring 2015


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World growth over the last year improved only marginally and was lower than projected. While activity in the US and the UK has increased as labour markets improve and monetary policy remains very accommodative, the recovery has been patchy in Europe and Japan as legacies of the financial crisis remain. Meanwhile, China is undergoing a tightly controlled slowdown. The growth of other developing countries has been disappointing due to political uncertainty, weak external demand and domestic policy tightening. Risks to the fragile global recovery are significant. Volatile financial and commodity markets, intensifying geopolitical tensions, or financial stress in a major emerging market, could lead to a significant reassessment of risk assets.



Richard H. Golubow

Winthrop Couchot PC

“There has been a decrease in corporate bankruptcies filed in the US over the past 12-18 months. Nationwide, corporate bankruptcies continued a downward trend in the first quarter of 2015 with 19 percent fewer corporate bankruptcy filings than in Q1 2014. The filing count for Q1 2015 reflects the lowest business bankruptcy total since at least 2006 when the Great Recession of 2007 resulted in a substantial spike in corporate bankruptcy filings. Not only are corporate bankruptcy filings down, but small businesses continue to dominate the bankruptcy count, with nearly 80 percent of Q1 2015’s corporate bankruptcies filed by companies with $2.5m or less in gross sales.”



Ian Huskisson

Travers Thorp Alberga

“Many of the larger insolvencies off the back of the financial crisis have or are close to working their way through the system. There appears to be fewer formal insolvencies, although we have seen more informal restructurings or soft wind downs than in previous years. Over the past 12 to 18 months, the Asian and Latin American markets appear to be generating insolvencies and shareholder disputes on a regular basis.”



Allan A. Rutman

Zeifmans LLP

“The market has turned down significantly during the last several years. There are fewer business failures, which has likely occurred as a result of low interest rates, the dramatic turnaround in the automotive industry resulting in fewer distressed auto suppliers, corporate cash on the sidelines and improved financing liquidity. Real estate markets too have remained buoyant. While most observers expect an increase in activity over the near term, it is difficult to forecast any change.”



Fernando Daniel Hernández

Marval, O’Farrell & Mairal

“After Argentina experienced its biggest ever economic crisis in history in 2001, a crisis which provoked the largest number of insolvencies involving companies from all sectors and all sizes, the number of recorded insolvencies dropped considerably in the years immediately following. However, after a rapid recovery, resulting mainly from the abrupt devaluation of the local currency and other economic and fiscal factors, the lack of policies addressing the country’s main macroeconomic structural problems caused a new decline and weakness in the economy. This, along with the lack of foreign financing, and other factors, are once again pushing Argentina to the brink of a new economic crisis.”



David Bryan

Bryan, Mansell & Tilley LLP

“In the UK, the level of corporate insolvencies continues to fall with the latest figures showing a further year on year decline. This pattern is also evident across most of Europe. Whilst some of this drop can be attributed to low interest rates enabling many businesses to cling on, we believe that it is also symptomatic of a general move away from formal insolvency processes toward consensual restructuring where possible. Stakeholders have realised that formal insolvency processes are expensive and value destructive. While they cannot always be avoided there is an increasing appetite for negotiated consensual solutions that address the underlying operational problems of the business, as well as the restructuring of the balance sheet, to create a viable business going forward.”



Jamie Ensor

Dillon Eustace

“The total number of insolvencies in Ireland has progressively decreased over the last 12-18 months, with a 17 percent decline in Irish company failures year-on-year in the first quarter of 2015, which is in keeping with the ever improving economic outlook in Ireland. There has been a consistent decrease in the number of receivers appointed by secured creditors to corporate entities – from 89 in the first quarter of 2014 to 55 in 2015. In relation to the restructuring process, despite the introduction of new legislation enacted in an attempt to make examinership more cost-effective and accessible, the take-up remains low, with only four companies entering examinership in the first quarter of 2015.”



Olivier Marion


“Restructuring activities have remained busy on the French market, although probably at a slower pace over the last quarter. We have continued to see significant corporations entering, or re-entering, financial crisis – companies such as Vivarte, Mory or Areva. This is usually a result of operational issues that have not been fixed in recent years. Waiting for a hypothetical economic rebound is no longer an option, especially when your cash resources are entering a critical stage. A significant portion of the bankruptcies we see in France today are used to finance operational – including social – reorganisations which the company cannot afford to finance, but could have a few years before, when cash was still present on the balance sheet.”



Javier Díaz-Gálvez de la Cámara


“Corporate bankruptcies in Spain registered 6420 proceedings in 2014, a decrease of 26 percent on 2013, when 8729 bankruptcy proceeding were filed. This trend has been in effect since the last quarter of 2013, which makes five consecutive terms where bankruptcy proceedings have decreased. Sectors that have been more affected by insolvency proceedings, like construction, real estate and services, representing 57 percent of total proceedings, have also seen a decrease in business failures. In the construction sector there were 786 fewer insolvency proceedings in 2014 compared to 2013, while real estate companies suffered 477 fewer business failures in the same period.”



Daniel Judenhahn


“In the German market we have seen fewer bankruptcies and insolvencies over the last 12-18 months. In particular, there has been a significant decline in large restructuring cases during that period. This is due in part to the overall positive market environment and comparably stable economy. Germany is still perceived as the safe haven of the eurozone by many investors. In addition, the ECB’s quantitative easing program, pumping €60bn of liquidity per month into the system, is blurring the picture and leads to a crowding out effect. Hence, certain investors need to put some of their money into other, often riskier assets, which in turn benefits the cost of capital for many borrowers and consequently reduces the number of imminently troubled assets.”



Alexander Isola

Graf & Pitkowitz Rechtsanwälte GMBH

“We believe that the directors of distressed companies are well aware of both the opportunities and threats the Austrian insolvency regime provides for debtors. Typically, companies try to restructure their debts out of court before material insolvency occurs and filing for insolvency becomes mandatory. In general, failing firms are well prepared and often manage to restructure, whether in or out of court, mostly with the help of new external funds. In recent years, the numbers of business failures have been rather stable, if not declining, notwithstanding the extraordinary event of the Alpine group insolvency – Austria’s largest insolvency case since World War II. In 2015, due to the negative commercial indicators – a rise in unemployment and therefore a reduction in spending capacity – we expect a moderate rise in insolvencies.”



Alessandro Farsaci


“The global financial and economic crisis, triggered by the US housing bubble burst in 2008, caused a GDP contraction of 1.9 percent in Switzerland in 2009. Between 2011 and 2013, the number of bankruptcy filings for small and medium sized companies continuously increased up to its peak in 2013. In 2014, we saw for the first time a reversal of this trend; the number of new bankruptcy proceedings was about 9 percent lower than in the previous year. In the period from January to April 2015, however, corporate insolvencies increased by 1 percent compared to 2014 levels.”



Sabrina Pugliese

KPMG in Italy

“According to the official statistics, in 2013 and 2014 the number of companies filing for bankruptcy procedures in Italy remained relatively stable. In 2013 more than 14,000 companies went into bankruptcy; in 2014 the figure was more than 13,000. A large number of these filings came from the northwest region. Accordingly, there has been a slight drop in the number of restructuring filings over the last 12-18 months. Some of those companies filing have been required to undergo additional rounds of restructuring, having already gone through this process more than once some years ago.”



Joanna Gasowski

K&L Gates Jamka sp.k.

“We have seen fewer business failures in general, especially in the road construction and manufacturing sectors. Recent statistics presented by Coface, a credit insurance provider, show that the number of corporate bankruptcies has continued to decline in Poland. Polish courts declared 823 firms bankrupt in 2014, a 7 percent decline over 2013, according to Coface. It seems that the trend of rising bankruptcies, which persisted for the last four years, has recently been reversed. The decrease in the number of corporate bankruptcies may be caused by a few factors such as the improvement of Polish firms supported by domestic demand and the current stabilisation of the road construction and manufacturing sectors, which had experienced enormous instability over the last few years.”



Debby Lim

Shook Lin & Bok LLP

“According to the Singapore Ministry of Law’s statistics, there were 160 companies wound up in 2014, compared to 126 in 2013. In terms of the first quarter of 2015, there have already been 52 companies placed into compulsory liquidation. These figures are still lower than 2001 to 2004 where on average there were 244 companies wound up annually. Despite significant challenges both at home and abroad, Singapore has grown faster than other developed economies and key Asian peers since the global financial crisis. However, as an open economy deeply connected to the global and Asian markets, Singapore will not be spared from the impact of major insolvency events in the region. The April 2014 IMF Report highlighted that economic risks and uncertainties remain in the Asia Pacific even though the region’s economic recovery is expected to continue.”



Andrew Heng

Ferrier Hodgson MH Sdn Bhd

“In general, we are seeing some trying times in the last 12 to 18 months for companies, in particular in the steel manufacturing and downstream oil and gas related businesses. It would also be fair to say that we have experienced an increase in corporate insolvencies in the last 12 to 18 months.”



Peter Gothard

Ferrier Hodgson

“Certainly, the level of insolvencies has been declining over the past two years, with not only the number of cases but also the size of matters falling sharply during that period. Teams of professionals concerned with insolvencies in the banking, accounting and legal sector have all shed numbers in response to the downturn. Having said that, government authorities that have taken a hands-off approach to debt collection throughout the Global Financial Crisis (GFC) and beyond, have now turned their attention to delinquent debtors, driving a record number of winding up petitions in May.”



Stefan Smyth


“Overall, both in our own experience, plus discussions with lenders and lawyers restructuring teams, we are noting a discernible increase in matters in the distressed restructuring and insolvency space. Statistics around liquidations are not a true indicator since the advent of Chapter 6 Business Rescue sees many cases previously destined for liquidation looking to file for rescue. Preliminary statistics for April 2015 show an increase of 4 percent in liquidations, year on year. Whilst accurate statistics for business rescue filings, and exits, are not readily available, a key theme emerging from surveys, industry participants and press is that there has been an increase in the number of companies that are financially distressed and commencing with business rescue proceedings.”



Bryan, Mansell & Tilley LLP

Dillon Eustace

Ferrier Hodgson

Graf & Pitkowitz Rechtsanwälte GMBH

K&L Gates Jamka sp.k.


Marval, O’Farrell & Mairal


Shook Lin & Bok LLP

Travers Thorp Alberga

Winthrop Couchot PC

Zeifmans LLP

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