Restructuring and transformation

May 2026  |  BRIEFING ROOM | BANKRUPTCY & RESTRUCTURING

Financier Worldwide Magazine

May 2026 Issue

FW discusses restructuring and transformation with Sylwia Maria Bea Pulverich at Norton Rose Fulbright LLP, Michael Robinson at Province, LLC and Mark Lawford at Weil, Gotshal & Manges (London) LLP.

FW: How would you describe the current landscape of corporate distress? What factors are driving restructuring activity?

Bea-Pulverich: The current landscape of corporate distress is shaped by a combination of macroeconomic and company-specific pressures. Higher interest rates over the past years have significantly increased refinancing costs, particularly for businesses that relied on cheap debt during the low-rate environment. This is especially evident in sectors such as real estate, where higher financing costs and declining asset values have put significant pressure on balance sheets. Therefore, many companies are facing refinancing challenges and tighter lending conditions. At the same time, elevated energy prices continue to weigh heavily on energy-intensive industrial companies, eroding margins and competitiveness. Alongside persistent inflation, supply chain volatility and weaker demand in some sectors, operational underperformance – due to outdated business models or insufficient cost flexibility – is becoming more visible. As a result, restructuring activity increasingly combines financial restructuring with operational transformation.

Robinson: The current distress environment is less about singular crisis events and more about a convergence of compounding pressures. Companies that took on cheap debt during the pandemic era are now contending with higher refinancing costs, tighter margins and, in many cases, operational models that have not kept pace with industry shifts. We are seeing stress concentrated in consumer-facing sectors, such as healthcare and industrials, but the thread connecting most of these situations is the same: overleveraged balance sheets meeting operational underperformance. Tariff uncertainty has layered on additional supply chain complexity, and private credit structures that were once a lifeline are starting to surface their own restructuring dynamics. What is different about this cycle is the slow burn nature of it – it is not a sudden shock, but rather a gradual erosion of liquidity that can catch entities off guard.

Lawford: Coming into 2026, companies were turning their focus to the refinancing of 2028 maturities – those deals struck at the peak of the last boom in 2021 when interest rates were markedly different. With interest rates now in a different place, structural change driven by electrification, elevated energy prices and the impact of artificial intelligence (AI), the refinancing of a number of deals in the 2021 cohort looks stretched. While maturity remains some time away for these situations, the market will typically begin to assess the picture up to two years in advance. However, recent events in Iran are likely to shift the focus from a question of ‘how is this business positioned from a medium-term refinancing, and what can be done about it now?’, to short-term analysis of cost pressures, commodity hedging and demand in the face of a rapid increase in energy prices.

FW: In what circumstances can distress be resolved consensually, and when is a formal process required?

Robinson: Consensual solutions work best when key stakeholders align on the business’s fundamental viability. If creditors believe in the underlying operations and the issue is primarily a capital structure problem, they can often reach an out of court agreement – an amend and extend, a liability management exercise or a negotiated recapitalisation. The economics generally favour it: lower costs, faster timelines and less disruption. But once alignment is lost – when creditor groups have competing interests, when there is litigation risk, or when the business needs the protection of a moratorium or similar stay on creditor enforcement to operate through the process – court-supervised proceedings become necessary. We have also seen situations where aggressive liability management tactics have actually poisoned the well for consensus, pushing parties into formal proceedings they might otherwise have avoided.

Lawford: Consensual out of court restructuring remains the preferred approach in most situations. Whether distress can be resolved consensually depends on the complexity of the capital structure, the severity of financial difficulty, stakeholder dynamics and the terms of the underlying credit documents. At lower levels of distress, a negotiated refinancing is typically achievable. However, as circumstances deteriorate, and the company has a need for additional liquidity or a write down of debt, creditor and sponsor behaviour shifts accordingly. A court-supervised process may be required to deal with dissenting or hold-out creditors, such as a UK restructuring plan or scheme of arrangement. Sponsors may also consider a liability management exercise (LME), taking advantage of flexibility in the credit documents to introduce new liquidity into the capital structure or amend terms of the debt, while maintaining their equity. Where a company cannot meet its cash requirements or insolvency becomes unavoidable, a formal process such as administration may be necessary. The ‘amend and extend’ transaction is a common consensual tool, extending debt maturities and adjusting key terms. Consent thresholds differ between loan and bond documentation. Loans typically require unanimous lender consent for material economic amendments, while high yield bonds may require up to 90 percent bondholder approval. In all restructurings, a credible ‘plan B’ is essential. This may include court-sanctioned mechanisms such as a scheme of arrangement or restructuring plan.

Bea-Pulverich: Distress can often be resolved consensually when stakeholders share aligned incentives and the company still has sufficient liquidity to negotiate with lenders and investors. In such situations, companies may pursue out of court solutions such as debt amendments, covenant resets, maturity extensions or capital injections. Other restructuring tools include carve outs of non-core businesses, trustee structures, debt buy-backs and more innovative concepts such as ‘shareholding as a service’. Consensual restructurings are generally faster, less costly and less disruptive to operations. Pre-insolvency restructuring tools with court involvement may become necessary when there are complex creditor groups, significant disagreements between stakeholders or high liquidity pressure. The German pre-insolvency corporate rescue toolkit – the StaRUG – provides tools such as creditor cram down or restructuring plans that allow a company to implement a binding restructuring even if some creditors oppose the proposal. Once statutory filing obligations are triggered, such as in cases of illiquidity or overindebtedness as defined under German insolvency law, management is legally required to file for insolvency, and formal insolvency proceedings become mandatory.

FW: What are the biggest execution challenges in today’s restructuring market?

Bea-Pulverich: One of the biggest execution challenges in today’s restructuring market is the complexity of capital structures and creditor groups. Many companies have multiple layers of debt, including different types of bank loans, bonds and other bilateral financing instruments such as German Schuldschein loans, which can make stakeholder alignment difficult. This is particularly the case where multiple creditors are involved on the financing side, such as in syndicated loan structures or widely held bond issuances, where coordination, consensus-building and achievement of quorums and required majorities can be especially challenging. Another issue is the speed at which liquidity situations can deteriorate in a volatile economic environment. As a result, even experienced and well‑established restructuring experts find it difficult to certify a solid and reliable liquidity forecast and, consequently, a robust restructuring concept.

Lawford: Today’s restructuring market presents execution challenges that intensify with corporate scale and capital structure complexity. Sophisticated creditor groups often hold divergent interests, and understanding the different drivers for stakeholders and navigating a path to a successful outcome, often in multijurisdictional situations, can be a challenge. Restructurings involving private credit will play out differently to those involving tradeable bank debt or bonds. Early identification and engagement with key supporting creditors is essential to driving a successful restructuring. Creating consensus among disparate lender groups, particularly bondholders, requires careful management and raises a number of issues. Both the company and bondholders, for example, will have sensitivities about the nature and timing of the disclosure of commercial information that need to be navigated, particularly listed companies and those with publicly traded debt. Dealing with regulators and governmental bodies also adds to the complexity of a situation, as has been seen in a number of high-profile restructurings recently in the UK. Current uncertainty around judicial approach is also shaping the current direction of restructurings. Restructuring plans have become more litigious and the recent change in how English courts assess fairness of restructuring plans has seen companies and advisers needing to quickly pivot to a different approach. LMEs provide an interesting alternative and the boundaries of what can be done in those transactions in Europe are currently being tested. We hope to see some guidance this year from the Hunkemöller decision. The boundaries of cooperation agreements, generally used by creditors as a defensive shield against LMEs, are also being litigated with challenges being brought by debtors and also by creditors who sit outside the cooperation agreement. Alternative restructuring methods, such as the use of contractual enforcement provisions in LME-style intercreditor agreements, are therefore increasingly being considered by parties. For multijurisdictional groups, post-Brexit recognition and enforcement across borders also remains a critical concern requiring bespoke analysis.

Robinson: Stakeholder dynamics have gotten significantly more complex. There are sophisticated creditor groups running cooperation agreements, sponsors deploying aggressive liability management strategies and private credit lenders that may soon encounter their first real workout cycle. Getting alignment across those constituencies takes more time, more creativity and more discipline than it used to. Layered on top of that are market conditions – refinancing windows open and close quickly, which compresses decision-making timelines. The other underappreciated challenge is talent and bandwidth. The volume of stressed and distressed situations has increased, and every one of them requires experienced advisers who can move fast.

FW: How crucial is early action in making a positive difference to outcome and director risk?

Lawford: Early action is critical – both for the company’s prospects and for directors personally. When a company approaches insolvency, directors’ fiduciary duties shift toward prioritising creditor interests. Delay can expose directors to personal liability for wrongful or misfeasant trading, as the landmark BHS case demonstrated through its record damages award. Engaging advisers early enables the board to stabilise the company’s position, broaden restructuring and refinancing options, and preserve stakeholder value. From a personal liability standpoint, directors are expected under English law to act with reasonable care, skill and diligence. Being properly advised is relevant to meeting that standard. Determining precisely when creditor interests must take precedence is often complex. Directors who fail to seek objective legal and financial guidance, and who continue trading without adequately considering creditors’ positions, risk significant personal exposure. In distress situations, timely, well-advised and informed decision making is the most effective protection for both the business and its directors.

Robinson: The single biggest predictor of outcome quality is how early management and the board engage with the problem. When a company still has liquidity runway and operational options, the range of solutions is dramatically wider. It is possible to pursue strategic alternatives, negotiate from a position of relative strength and preserve value for all stakeholders. Once liquidity becomes the immediate crisis, optionality collapses. Directors also need to understand that their fiduciary duties shift as a company approaches the zone of insolvency. Early engagement with qualified advisers is not just strategically smart – it is a meaningful step in managing personal liability risk. The boards that are able to effectively manage distress are the ones treating their financial advisers as an early warning system, not a last resort.

Bea-Pulverich: Early action is often critical in achieving a successful restructuring outcome. When companies address financial pressure at an early stage, they typically have more strategic options available, including consensual negotiations with lenders, shareholders or other creditors, as well as access to new financing and in-court solutions. Early engagement with advisers and stakeholders also allows management to develop a credible restructuring concept before liquidity becomes critical. From a governance perspective, early action is also important in managing director risk. Directors have legal duties to monitor liquidity and act in the best interests of the company, and also its creditors when financial distress arises. By recognising warning signs early and taking proactive steps, boards can demonstrate responsible oversight and reduce the risk of personal liability.

FW: How are companies applying AI, automation and data-driven models in restructuring?

Robinson: Practical applications are evolving quickly. On the advisory side, data analytics and AI-driven tools are being used to accelerate the diagnostic phase – analysing large volumes of financial data, identifying cash flow anomalies and building scenario models faster than traditional methods allow. That speed matters when liquidity is at stake. On the operational transformation side, companies going through a turnaround are increasingly deploying automation to reduce cost structures, whether that is in back office functions, supply chain management or customer-facing operations. A word of caution: while AI is a tool for better, faster decision making – it does not replace the judgment and experience that restructuring requires. These scenarios cannot run on autopilot. The companies getting the most value from these technologies are the ones pairing them with experienced advisers who know what questions to ask.

Bea-Pulverich: Companies and their advisers are increasingly using AI, automation and advanced analytics to support restructuring and operational transformation. Data-driven models can help management teams analyse large volumes of financial and operational information more quickly, enabling better forecasting, liquidity monitoring and scenario planning. In restructuring processes, automation can streamline tasks such as financial modelling, document analysis, project management and stakeholder reporting, improving efficiency and decision making. While technology does not replace strategic judgement, it allows advisers and management teams to focus on higher-value analysis and to respond more quickly to evolving business and market conditions.

Lawford: Companies and their advisers will increasingly deploy AI to support restructuring and operational transformation as the technology develops and improves. The technology already offers material advantages in analysing large datasets, reviewing documentation and accelerating due diligence – benefits that prove particularly valuable when dealing with complex corporate groups, multilayered capital structures and time-pressured situations requiring rapid assessment of substantial information. Restructurings invariably place considerable demands on management time and internal resources. AI, when properly implemented and supervised, could serve as an effective tool to support existing leadership while also enabling advisers and newly appointed chief restructuring officers, for example, to familiarise themselves efficiently with the critical data and issues affecting the company and its creditor constituencies.

FW: How have legal and regulatory frameworks evolved to support restructuring efforts?

Lawford: The Corporate Insolvency and Governance Act 2020 represented the most significant reform to UK insolvency law in over two decades. Most notably, it introduced the restructuring plan with its cross-class cram down power, enabling courts to sanction compromises even where certain creditor classes dissent, provided fairness conditions are met. Complementary measures include a standalone moratorium offering breathing space and restrictions on suppliers terminating contracts during restructuring. Post-Brexit, UK restructuring tools no longer benefit from automatic European Union (EU) recognition, requiring a case by case approach, relying on local private international law and local adoption of the United Nations Commission on International Trade Law model law, where relevant. Further, across Europe, the Preventive Restructuring Frameworks Directive has led to the introduction of court supervised restructuring processes allowing cross class cramdown, notably with those in the Netherlands, Spain, France, Germany and Italy being used in complex proceedings. A new EU directive, expected in the first quarter of 2026, will also harmonise certain insolvency measures, which will provide certainty for businesses and investors. These frameworks enable companies to restructure with limited operational disruption while preserving jobs and business value, and developments in Europe provide multijurisdictional groups with greater opportunities outside of the UK and the US to find an optimal restructuring solution. The UK, however, continues to be an innovative and well respected jurisdiction, well supported by an excellent judiciary with renowned restructuring expertise and a deep well of case law, which enables positive restructuring outcomes for companies.

Bea-Pulverich: In recent years, many jurisdictions have introduced legal reforms designed to facilitate earlier and more effective restructurings. For example, Germany has implemented a preventive pre-insolvency restructuring framework following the EU Restructuring Directive – the ‘StaRUG proceedings’. This framework allows companies to restructure debt outside formal insolvency proceedings with court sanctioning while benefitting from tools such as creditor cram down, restructuring plans and temporary protection from enforcement actions. Such mechanisms encourage companies to address financial difficulties earlier and increase the likelihood of preserving enterprise value. In Germany, the introduction of the StaRUG has been a key development. It is particularly well-suited for cases involving financial restructurings with manageable creditor groups, where early action is still possible and operational stability can be maintained. With several years of practical experience and case law, use cases have developed where StaRUG is particularly effective, such as in dealing with situations where hold-out strategies are being pursued, and situations involving shareholder disputes.

Robinson: The evolution of legal and regulatory frameworks has been significant, particularly in Europe and the UK. The EU’s Restructuring Directive has pushed member states toward more flexible preventive frameworks, and the UK’s restructuring plan – introduced under the Corporate Insolvency and Governance Act – has quickly become a powerful tool, giving companies real options that were not readily available in years past. That said, recent disputes over the treatment of ‘out of the money’ creditors have generated some market uncertainty that courts are still working through. In the US, we have seen continued evolution in how courts handle liability management disputes and creditor on creditor conflicts, with new case law shaping the boundaries of permissible transactions. Jurisdictions in the Middle East and Asia have also substantially modernised their insolvency regimes. For companies, these developments mean more tools – but also more complexity. Understanding which jurisdiction and which process best serves a particular situation has become a strategic question in itself, and getting that right early can materially improve outcomes.

FW: Do you expect restructuring and transformation activity to increase in 2026, and what will drive it?

Bea-Pulverich: Restructuring and transformation activity is likely to remain elevated in 2026. A key driver will be the significant volume of corporate debt that needs to be refinanced in the coming years, much of which was originally issued during the low interest rate environment. Real estate, especially, remains under strain. In addition, key German industries are facing sustained pressure amplified by global political instabilities. The automotive sector continues to undergo a profound transition driven by electrification, supply chain shifts and increasing global competition. More recently, signs of stress have also emerged in parts of the pharmaceutical and broader healthcare industry and other energy-intensive industrial companies, which will probably also remain in the following months and years. Overall, an increasing number of sectors are being affected, forcing companies to rethink their business models and cost structures. As a result, restructuring is no longer limited to isolated cases but is becoming a broader strategic tool.

Robinson: We expect activity to increase modestly and remain elevated throughout the year. Drivers are structural rather than cyclical. There is roughly a trillion dollars in speculative-grade debt maturing over the next few years, and many of those borrowers are going to need to address their capital structures in an environment where credit metrics have weakened. Add ongoing margin compression, trade policy uncertainty, geopolitical tensions, ongoing military conflicts and the delayed effects of higher interest rates flowing through to operating performance – that is a steady pipeline. The sectors we are watching most closely are healthcare, consumer, software, chemicals and certain corners of real estate. The demand for integrated advisory services across restructuring, forensic and operational disciplines will continue to grow.

Lawford: The picture here is shifting rapidly. A short conflict in Iran may bring energy prices back down and we may revert to distress largely being driven by maturities and the impact of structural changes, in which case restructuring activity through the year is likely to be steady, though perhaps rising as those maturities approach. On the other hand, a larger conflict with damage to oil production infrastructure across the Middle East and a prolonged blockage of the Strait of Hormuz will likely lead to a sharp slowdown in economic activity, with inflation and interest rates spiking. Such an outcome is likely to put more immediate pressures on corporate performance and liquidity, and lead to new restructuring situations that were not previously on watch lists, and accelerate the timeline of those that were.

Sylwia Maria Bea-Pulverich is a partner and co-head of restructuring, EMEA at Norton Rose Fulbright LLP in Frankfurt, with over 20 years of experience advising companies, investors and creditors on complex cross-border restructurings. She co-founded Distressed Ladies – Women in Restructuring e.V. and lectures on distressed M&A. She holds an executive MBA from Boston University. She can be contacted on +49 (69) 505096 230 or by email: sylwia.bea@nortonrosefulbright.com.

Michael Robinson has nearly two decades of restructuring and investment banking advisory experience on transactions ranging from $20m to over $1bn across industries and geographies. He specialises in serving as a financial adviser and providing distressed solutions to corporations, creditors and equity owners of companies, frequently supporting distressed sales, valuation reports and producing fairness opinions to protect clients. He can be contacted on +1 (702) 685 5555 or by email: mrobinson@provincefirm.com.

Mark Lawford is a restructuring partner at Weil in London with nearly 25 years of experience. He specialises in complex cross-border restructurings and insolvencies and the associated litigation. Ranked by Chambers and Legal 500, he is praised for his expertise and strategic skills, chairs R3’s general technical committee and is a member of the International Insolvency Institute. He can be contacted on +44 (0)20 7903 1050 or by email: mark.lawford@weil.com.

© Financier Worldwide

THE PANELLISTS

Sylwia Maria Bea-Pulverich

Norton Rose Fulbright LLP

Michael Robinson

Province, LLC

Mark Lawford

Weil, Gotshal & Manges (London) LLP