During the pandemic, many businesses were forced into survival mode, with revenues drying up and liquidity under pressure. Now, businesses around the globe have to navigate an asymmetrical recovery whilst looking ahead to the future.
As economies begin to emerge from the turmoil of the COVD-19 pandemic, the report explores the challenges facing businesses and the prospects ahead in 46 markets worldwide. We also look at developments in insolvency legislation and their implications for restructuring professionals, businesses and lenders.
Insolvency and restructuring have been subdued, but are expected to pick up as we move into 2022 and beyond. It’s important for companies to re-appraise and shore up their working capital requirements to address the unwinding of government support and debts accrued during the pandemic, while at the same time meeting renewed customer demand and delivering investment delayed by the pandemic. The limited availability of further government support will increase reliance on existing lenders, shareholders and access to the capital markets.
While the momentum for global economic recovery is gathering overall, the pace looks set to vary between countries and sectors. One key factor is progress on vaccination. However, the speed of recovery within and between sectors also differs. For example, airlines and tourism will take time to get back to pre-pandemic levels, but other sectors such as hospitality and retail may come back more quickly as restrictions ease.
Rising raw material prices are heightening inflationary pressures, which may translate into interest rate rises in due course. Supply chain disruption and skills shortages could hold up recovery and jeopardise some businesses. Supply chain resilience is therefore essential, especially in the most affected sectors such as automotive and construction. Dealing with talent gaps requires long-term planning as well as short-term plugs. Pay, conditions and prospects may all need to be improved. Action to improve diversity could in turn enlarge talent pools and help to attract higher quality recruits.
As the focus shifts to recovery and growth, businesses are looking at how to adapt and compete in markets being reshaped by the acceleration in digital transformation and growing stakeholder focus on environmental, social and governance (ESG) issues. It’s important to factor in the impact of implementing such changes when considering the appropriate capital structure and funding requirements. Careful planning and prioritisation are also essential now the ESG and diversity and inclusion are weighing ever more heavily on credit decisions.
Legislation and innovation are improving the speed, choice and flexibility of restructuring options. It’s important for businesses to determine which tools best serve the required purpose. Where the new arrangements are debtor-friendly, companies may use these to help tackle some of the issues emerging from the crisis. When the options favour debtors, lenders will need to be on the front foot in challenging such proceedings.
Whether you’re a corporate, creditor, sponsor or other stakeholder with a financial interest in a company, we can help you to protect and enhance value now and prepare for the changes ahead.
Our global and local expertise not only includes restructuring and insolvency, but also in-depth knowledge of the trends and expectations reshaping different sectors. We’re also marked out by our ability to offer a full range of support in key areas such as strategy, tax, pensions and operational efficiency.
Our approach is built around proactive action to help maximise options and open up a clear path to recovery and growth. We create a joined-up response, both in our package of support and in helping stakeholders such as management and creditors to develop collaborative solutions.