The restructuring industry is experiencing a period of heightened activity and the volume of restructuring mandates is expected to continue to grow. What’s driving this increase and what kind of support are companies looking for from corporate service providers?
In Q1 2024, CSC canvassed the views of 150 senior executives in the financial services, legal, private credit, and private debt sectors worldwide to gauge views on the state of the global restructuring industry. Strikingly, a significant majority are expecting a rise in restructuring mandates over the next year or two.
The full results of this research are revealed in our new report—The State of Restructuring 2024.
Restructuring mandates are expected to increase over the next 12-24 months
Our research found a majority of restructuring professionals (83%) expect to see the volume of restructuring mandates grow modestly or significantly over the next 12-24 months.
Only 16% of those we surveyed expect the number of restructuring mandates to stay the same and less than 1% expect the volume to fall.
In terms of restructuring opportunities worldwide, North America and Continental Europe were each selected by more than two-fifths (41%) as geographies currently seeing significant restructuring activity, ahead of the U.K. (30%) and APAC (29%).
This activity builds on the rise of restructurings seen over the past year or two. The U.K., for example, had more registered company insolvencies last year than in any year since 1993, according to the Insolvency Service. But what’s behind it?
At CSC we see many restructurings driven by decisions taken during the pandemic, with companies which took on a considerable amount of debt during COVID-19 now seeing that debt come due but being unable to refinance.
Indeed, some current restructurings are companies that probably should have filed in 2020, but were able to hold out until now because they were bolstered by inexpensive money in the market during the pandemic.
In addition, the pandemic brought moratoriums on defaults and enforcements in several markets, leading to large numbers of amend and extend deferrals which now have or will soon come due.
At a sector level, we are seeing the global commercial real estate market hit particularly hard. Retail sector restructurings are on the rise and property values for those such as the office sector have dropped significantly, dragged lower by the switch to work-from-home.
With restructurings on the rise and more companies needing external support through the process, we asked what firms are looking for from corporate service providers.
What attributes are most valued in a service provider?
Our research found that the two most important factors for respondents when selecting corporate service providers are cost effectiveness (56%), and flexibility and responsiveness (55%).
Other attributes that about a third of respondents said they also value in a provider include:
- Expertise in specific industries or sectors
- Regulatory compliance capabilities
- A global offering
- The quality of their technology platform
The value that a good partner can bring to the restructuring process is becoming increasingly recognized. Their experience means they can bring efficiency to the actual restructuring process as well as the ongoing management of the company.
Very few use only one provider
About half of respondents said they use three service providers to support:
- Loan agency services
- Indenture trustee services
- SPV management services
- Collateral/security trustee services
- Director services
- Bond agency services
Using two providers ranked comfortably second for all these services, other than SPV management for which 30% of respondents said they use four or more providers.
Only a very small minority of respondents said they depend on just one independent partner to provide restructuring services, highlighting the difficulty of finding a one-stop-shop.
How CSC helps
CSC provides restructuring expertise from highly experienced professionals across a variety of products and offers interconnected, global cross-border service.
One of the things that differentiates us from many of our competitors is that we’re able to provide an all-in-one integrated offering, eliminating the need for multiple outsourcing partners.
We deliver what we say we will deliver and our nimbleness means we are always prompt to respond.
Interested in finding out more about the challenges and opportunities facing the restructuring industry and key regional differences? Download our State of Restructuring 2024.
