Andrew Glenn and Shai Schmidt are featured in the January 2022 issue of Turnarounds & Workouts in an article about restructuring predictions for this year. Andrew and Shai discuss what’s in store for the restructuring industry in 2022, how this year’s restructuring activity will compare to prior years, which sectors will see the most activity, and what the greatest challenges will be.
In addressing which sectors will remain vulnerable this year, Andrew and Shai note: “The longer the pandemic persists, the harder it will be for some companies — especially those in industries most affected by lockdowns and disruptions to travel — to stay afloat while managing the substantial debt many of them have taken on. The second source of uncertainty is inflation and whether it will start to dissipate in 2022 as supply-chain bottlenecks ease. If inflation continues to overshoot the Fed’s target, we can expect it to tighten monetary conditions faster than it had planned, which could result in more restructuring activity as companies will no longer be able to take advantage of ultra-low interest rates to refinance their debt.”
When discussing what the greatest challenge will be this year, Andrew and Shai claim: “It is hard to predict how much longer the Fed will continue its accommodative monetary policy. As explained, this easy-money environment is typically not conducive to abundant restructuring activity. Our challenge in 2022 will be to identify — even in this environment — attractive restructuring opportunities for our clients. An important piece of the puzzle is familiarizing ourselves with industries and companies even before they are in distressed territory. Understanding industry trends and thoroughly reviewing debt documents to spot potential legal issues are also of paramount importance. We view this relatively calm period as an opportunity to position ourselves for the next restructuring cycle, whenever it may arrive.”