In 2023, the sharpest global interest rate increases in over a decade placed unprecedented pressure on corporate balance sheets, particularly among firms reliant on floating-rate debt or aggressive leverage strategies. The resulting liquidity strains led to a surge in debt restructuring activities across multiple sectors.

Industries most affected included real estate, retail, and technology, where slower revenue growth combined with higher financing costs to erode cash flow positions. Private equity-backed firms, often saddled with significant leverage, faced acute refinancing challenges.

Debt restructuring approaches varied widely. Some firms negotiated amendments and covenant waivers to buy time for operational turnarounds, while others pursued out-of-court exchanges or pre-packaged bankruptcies to achieve more substantial balance sheet resets.

Investors adopted increasingly creative solutions, such as debt-to-equity swaps, convertible instruments, and contingent payment structures, aiming to balance recovery prospects against the risk of prolonged insolvency proceedings.

From a legal perspective, jurisdictions that provided streamlined restructuring frameworks — notably the UK’s Part 26A Restructuring Plan and Singapore’s enhanced insolvency laws — saw significant activity, highlighting the growing globalization of restructuring strategies.

The experience of 2023 emphasized the importance of early engagement with stakeholders, transparent financial reporting, and proactive liquidity management. Successful restructurings often hinged on maintaining open dialogue between creditors, equity holders, and management.

Looking ahead, restructuring professionals expect that even if interest rates stabilize, refinancing risk will remain elevated, and distressed opportunities could continue to emerge, particularly in sectors undergoing structural transformations.