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Though numbers are down from the global financial crisis, corporate bankruptcies and restructurings are still occurring in certain sectors. The retail, energy and global shipping sectors, to name just a few, have experienced a difficult period over the last 12 to 18 months, and this uncertainty is set to continue. The retail industry in particular has been at the mercy of shifting consumer habits and reduced spending and has so far struggled to respond. As online retailers continue to spread into new jurisdictions and new areas of the market, brick and mortar retailers will remain under pressure.

UNITED STATES

Barry Chatz

Arnstein & Lehr LLP

“Overall, the national climate with respect to bankruptcies over the last 12 to 18 months reflects a material increase in retail failures, as well as all aspects of the energy sector. With far less notoriety, we have seen further stress occurring in the food sector, including failures of grocery stores, as well as suppliers relating thereto. We understand that statistics show business bankruptcies declining, but in these specific industries, we are at or nearing ‘great recession’ numbers. I think a reason for the statistical decline in bankruptcies is that only the mid-market and large businesses are electing to file.”

BRAZIL

Luciana Faria Nogueira

TozziniFreire Advogados

“In the last 12 to 18 months, there has been a significant increase in the number of corporate bankruptcies and insolvency proceedings in Brazil, especially regarding judicial reorganisation – the most common insolvency proceeding in the country. During 2016, there was a 44.8 percent year-on-year increase in the number of requests for judicial reorganisation. The main reasons for the increase are the political and economic crisis in Brazil, the negative financial effects of Operação Lava Jato and the evolution of the applicability of the Brazilian Bankruptcy and Restructuring Law – which was enacted in 2005 and has matured enough to provide specific solutions for each sector of the economy, allowing creditors recovery.”

ARGENTINA

Fernando Hernández

Marval, O’Farrell & Mairal

“By the end of 2015, the Argentine economy was suffering a crisis caused by, among other things, high inflation, foreign exchange increasing restrictions, including the split of the foreign exchange market, with the peso strongly and artificially appreciated against the US dollar in a restrictive official foreign exchange market and a blue market with spreads of more than 50 percent with respect to the official market, public utility tariffs frozen for more than 12 years and a record fiscal deficit. As a consequence, the number of bankruptcies increased again during the fourth quarter of 2015 compared to the same period in 2014.”

UNITED KINGDOM

David Bryan

Bryan, Mansell & Tilley LLP

“The last 12 months have seen considerable political upheaval, with Brexit and now a surprise general election in the UK. The latest figures from the UK Insolvency Service show a small rise in underlying company insolvencies in Q1 2017. But they are still much lower than before the financial crisis. Administrations and CVAs, the main formal restructuring processes in the UK, have been at a stable rate since 2014. Already low interest rates were further reduced after Brexit in 2016 and show no signs of increasing in the near term. It remains a benign environment and we do not expect to see any great change in the number of business failures.”

FRANCE

Olivier Marion

PwC

“France has experienced a progressive recovery in its economy over the past 12 to 18 months, with an expected 1.6 percent GDP growth for 2016. Last year, the number of failures and bankruptcies decreased by 7 percent compared to the year before – close to 59,000 companies – and 2017 should see a comparable trend. That said, several industry sectors continue to suffer. While we see fewer leveraged buyout (LBO) structures in distress, more corporate groups are currently suffering, and the financing structures put in place on new LBO transactions, rather aggressive in essence, may well prepare new waves of restructuring transactions over the coming years.”

GERMANY

Florian Rieser

KPMG

“In the last 18 months, the restructuring and insolvency market in Germany has remained very quiet. The German economy was marked by strong and steady growth throughout 2016, with GDP increasing by 1.9 percent. In 2016, Germany’s trade surplus achieved a new record of €252.9bn, overtaking China as the world’s largest trade surplus. Coupled with low interest rates, Germany’s strong economic situation is resulting in a further decrease in the number of insolvencies in Germany. In 2016, German local courts reported 21,518 business insolvencies, which is a decline of 6.9 percent compared to 2015.”

AUSTRIA

Ewald Kager

Grant Thornton

“In 2016, insolvency cases among corporates increased by 3.76 percent to 5463 cases, based on publicly available sources. But this is only half the picture. A dramatic increase of 11 percent has been recorded where such proceedings have been rejected due to a lack of insolvency assets. If such proceedings are rejected, due to a lack of assets at the moment of the insolvency, this means that the company did not even have €3500 available, the amount required to open insolvency proceedings in Austria. Another interesting fact is that insolvencies usually peak in the second half of the year.”

ITALY

Francesco Iodice

Cleary Gottlieb Steen & Hamilton LLP

“According to a recent survey by CERVED, during 2016 bankruptcy liquidation proceedings decreased by 8.5 percent and other insolvency and restructuring proceedings decreased by over 35 percent. Such results are partly due to a moderate improvement in the Italian economy, which is back to a mild rate of growth after various years of recession. The improvement is also partly the result of reforms of Italian bankruptcy laws, which have sought to tighten certain requirements for distressed debtors to accede to a judicial composition with creditors and thereby prevent cases of abuse, where debtors filed for such proceedings for the exclusive purpose of benefitting from a stay over enforcement actions against their assets, without genuinely pursuing a restructuring of their business capable of offering an actual recovery to their creditors.”

GREECE

Thanassis Panopoulos

PwC Greece

“After eight years of recession in Greece, the number of corporate insolvencies declined over the last two years. The number of recorded corporate insolvencies reached high levels during 2011 to 2014, a period characterised by dramatic economic contraction, political uncertainty, high interest rates and negative growth. Although market conditions remain difficult, we notice that recent legislative and regulatory developments have given troubled companies other options, such as rehabilitation, administration and out of court settlements. Furthermore, restored financial stability in the banking system enhanced lenders’ ability to support restructuring instead of bankruptcy solutions.”

CHINA & HONG KONG

Georgia Chow

Grant Thornton

“The rate of compulsory liquidations in Hong Kong has remained relatively consistent in recent years, with 90 firms wound up in 2015, 91 in 2016 and the rate for Q1 2017 – 22 – showing a similar trend likely for 2017. It is worth noting that these figures are down from a high of 115 in 2009, following the global financial crisis. However, these statistics only cover Hong Kong registered companies. Over the last 12 to 18 months there have been a number of complex and larger multijurisdictional matters, typically involving offshore entities with Hong Kong or Chinese operations. In addition, given the practical difficulties of undertaking formal insolvency procedures in China, informal restructurings are more common.”

AUSTRALIA

Peter Gothard

Ferrier Hodgson

“The number of formal appointments continues to decline; the December 2016 quarter was down 27.3 percent on the same period in 2015. The last 12 months has, however, seen the appointment of administrators to Arrium Ltd – an international mining and steel manufacturer – which was the largest corporate insolvency since the Global Financial Crisis (GFC). Given the ongoing low interest rate environment, secured lenders continue to take a relatively passive approach to the majority of troubled borrowers and we have seen lower levels of large institutional files reaching formal insolvency.”

NIGERIA

Emmanuel Ekpenyong

Fred-Young & Evans LP

“Over the past 18 months, the business climate in Nigeria has endured a number of difficulties, including inconsistent power supply, high interest rates, high infrastructure and banking charges, bad roads, scarcity of foreign exchange and a high cost of energy, which has led to high cost of production and reduced competiveness. Consequently, the operations of many companies have been shut down and winding up proceedings are on the increase. In order to survive, many companies have reduced production by close to 50 percent, made employees redundant and have slashed remuneration for remaining workers.”

CONTRIBUTORS

Arnstein & Lehr LLP

Bryan, Mansell & Tilley LLP

Cleary Gottlieb Steen & Hamilton LLP

Ferrier Hodgson

Fred-Young & Evans LP

Grant Thornton

KPMG

Marval, O’Farrell & Mairal

PwC

PwC Greece

TozziniFreire Advogados