Restructuring teams stay busy as corporate insolvencies hold high
Elevated company failures and a steady stream of director disqualifications are keeping insolvency and restructuring lawyers among the busiest in the market.
Restructuring and insolvency practices remain among the busiest corners of the legal market, as company failures continue to run at elevated levels well above the lows seen during the pandemic support era. The withdrawal of that support, higher borrowing costs and stubborn input prices have left many businesses struggling to service debt, and advisers say the strain is being felt most acutely in construction, retail, hospitality and other consumer-facing sectors.
The bulk of the activity involves smaller companies entering creditors’ voluntary liquidation, but lawyers report a steady flow of larger and more complex mandates as well, from restructuring plans to formal administrations. The restructuring plan, introduced under the Corporate Insolvency and Governance Act, has become an established tool for larger companies seeking to bind dissenting creditors, and its use has generated a growing body of case law that practitioners are watching closely.
Alongside the insolvency work, enforcement against errant directors has continued. The Insolvency Service pursues disqualifications where directors are found to have run companies improperly, and advisers note that conduct during and after the pandemic support schemes has featured in a number of investigations. Directors facing action increasingly seek early legal advice, aware that a disqualification can end a career and, in the most serious cases, lead to personal liability.
For firms, the buoyancy of the restructuring market has provided a valuable counterweight to quieter transactional conditions, and several practices have redeployed lawyers towards it. The counter-cyclical nature of the work is well understood, and teams that invested through the leaner years are now reaping the benefit.
Practitioners caution that the picture could shift if economic conditions ease and financing becomes cheaper, which would relieve pressure on struggling businesses. For now, however, the pipeline of distressed situations shows little sign of thinning, and insolvency specialists expect to stay busy well into next year.