| THE RISK RESET
US – MASSACHUSETTS, TEXAS, NEW YORK, CONNECTICUT, OKLAHOMA, NEW MEXICO, ARKANSAS, COLORADO
revenues, margin compression, rising labour and input costs, covenant pressure, customer concentration, supply chain disruption, and limited access to capital. The prolonged higher-interest-rate environment continues to be one of the most significant drivers of distress. Fitch recently reported that private credit borrower defaults reached a record 9.2% during 2025, with many companies struggling under floating-rate debt structures that significantly increased borrowing costs. Businesses that relied heavily on leveraged financing during the previous decade are particularly vulnerable as debt maturities come due. Geopolitical developments further complicate the operating environment. Trade tensions, tariff uncertainty, sanctions regimes, and supply chain realignment efforts can create sudden disruptions to cash flow, inventory management, and customer demand. Industries with significant international exposure are especially susceptible to these risks. One of the most common mistakes management teams make is delaying action. Early warning indicators, including declining liquidity, reduced borrowing capacity, and deteriorating vendor relationships, should trigger proactively generally preserve more value and maintain greater flexibility than those that wait until a liquidity crisis develops. Businesses can mitigate these risks immediate evaluation of strategic alternatives. Companies that act by implementing rigorous cash flow forecasting, stress testing multiple operating scenarios, maintaining regular lender communication, and conducting periodic reviews of covenant compliance and debt maturities. Boards should
now utilise AI throughout portions of the M&A process, while the vast majority incorporate AI in at least one transaction-related function. As a result, buyers are increasingly scrutinising data quality, governance frameworks, and cybersecurity controls during diligence. Regulatory scrutiny also continues to intensify. Companies must evaluate potential exposure arising from data privacy obligations, sanctions compliance, anti-corruption regulations, and sector-specific oversight. In cross-border transactions, national security reviews and foreign investment restrictions have become increasingly important considerations. Tax planning remains a critical driver of deal structure. Buyers and sellers are paying closer attention to entity selection, cross-border tax implications, successor liability concerns, and evolving international tax frameworks. These considerations often influence whether transactions are structured as asset purchases, equity acquisitions, or more complex hybrid arrangements. Finally, geopolitical uncertainty is reshaping investment priorities. Rather than focusing exclusively on cost efficiency, many organisations are prioritising supply chain resilience, operational redundancy, and geographic diversification. As a result, successful integrates legal, financial, tax, regulatory, technology, and operational expertise from the earliest stages of planning. Conclusion The current restructuring environment reflects a fundamental shift in how businesses, lenders, and investors manage financial risk. While rising interest rates, refinancing pressures, and geopolitical uncertainty continue to create challenges, organisations are increasingly utilising proactive restructuring strategies, distressed transactions, and innovative capital solutions to preserve value and maintain operational continuity. As regulatory scrutiny expands and technology becomes increasingly central to enterprise value, successful transactions will depend on disciplined planning, comprehensive due diligence, and early stakeholder engagement. Companies that identify risks early and adopt a forward- looking approach to restructuring and transaction planning will be best positioned to navigate uncertainty and capitalise on emerging opportunities. transactions increasingly require a multidisciplinary approach that
KEY TAKEAWAYS
Deals in difficult markets
Early intervention preserves optionality. Companies that proactively address liquidity
concerns, covenant pressures, and operational challenges typically have access to a broader range of restructuring and financing alternatives than those that delay action. Distressed transactions are increasingly strategic. Restructurings, liability management exercises, and Chapter 11 processes are no longer viewed solely as tools of last resort; they are increasingly being used to preserve enterprise value, attract capital, and facilitate long-term business transformation. Due diligence has become multidimensional. Beyond traditional financial and legal reviews, buyers and investors are placing greater emphasis on cybersecurity, AI governance, regulatory compliance, supply chain resilience, and geopolitical risk when evaluating transactions.
Thomas H. Curran Managing Partner Thomas H. Curran Associates, LLC
Q1 What trends are driving restructuring, distressed transactions, In the United States, restructuring and distressed transaction activity continue to be shaped by elevated interest rates, refinancing pressure, persistent inflation, and ongoing geopolitical uncertainty. Although corporate credit conditions improved somewhat during 2025, many companies remain and deal activity in your jurisdiction? burdened by debt incurred during the low-rate environment and are facing increasingly complex refinancing challenges as maturities approach. One of the most notable trends has been the rise of out-of- court restructurings and liability management exercises. According to S&P Global Ratings, distressed exchanges accounted for roughly 60% of U.S. corporate defaults in 2025, making them the most common restructuring tool and underscoring the growing preference for negotiated restructurings over formal insolvency proceedings. At the same time, distressed M&A remains an important mechanism for preserving enterprise value. Strategic buyers and private equity investors continue to pursue acquisitions of fundamentally viable businesses experiencing temporary liquidity
constraints. Formal Chapter 11 processes remain relevant, particularly where a Section 363 sale can facilitate a rapid transfer of assets free and clear of liabilities. Recent restructurings, such as that of Spirit Airlines, illustrate these trends in practice. Spirit emerged from Chapter 11 in March 2025 after completing a court-approved restructuring that converted approximately $795 million of debt into equity and secured an additional $350 million equity investment from existing investors. The transaction reflected the growing use of balance sheet restructuring and creditor- supported recapitalisations to address leverage challenges
while preserving enterprise value and demonstrates how companies can utilise restructuring tools not simply to address insolvency, but to attract new capital, stabilise operations, and position themselves for long-term recovery. Another notable trend is the growing use of liability management transactions and consensual restructurings. Companies are increasingly seeking to address capital structure challenges through debt exchanges, amendments, and negotiated solutions before a formal insolvency proceeding becomes necessary. Lenders and borrowers alike are demonstrating greater willingness to pursue cooperative approaches aimed at preserving value and avoiding the costs and uncertainties associated with litigation. Artificial intelligence also influences deal activity. Buyers are increasingly evaluating AI capabilities, cybersecurity resilience, and data governance frameworks as core value drivers, particularly in technology, healthcare, and financial services transactions. Q2 What are the most common triggers during financial distress, and how can businesses mitigate these risks? Financial distress is rarely caused by a single event. More commonly, it results from a combination of declining
also ensure that governance structures remain robust during periods of distress, as heightened scrutiny from creditors, regulators, and stakeholders increasingly accompanies restructuring situations. Q3 diligence priorities evolving amid regulatory scrutiny, tax considerations, and geopolitical changes? Transaction structures are becoming increasingly sophisticated as buyers seek to manage risk in a more uncertain regulatory and geopolitical environment. Earn-outs, contingent consideration mechanisms, representations and warranties insurance, and targeted indemnification provisions are now frequently used to bridge valuation gaps and allocate risk more effectively. Due diligence has expanded well How are transaction structures and due beyond traditional financial and legal reviews. Cybersecurity, data privacy, AI governance, and regulatory compliance have become central components of transaction planning. Recent industry research indicates that approximately one third of companies
Thomas H. Curran has developed his practice over the past three decades, focusing primarily on bankruptcy and insolvency proceedings. He often represents secured and unsecured creditors, committees of creditors, trustees and equity security holders in bankruptcy and insolvency proceedings as well as financial institutions and other lenders in out-of-court loan restructurings, assignments for the benefit of creditors, foreclosures, repossessions, and the sale of distressed assets and businesses. Furthermore, he also has experience representing business debtors in workout, restructuring and bankruptcy matters.
ABOUT US... thcalaw.com
Thomas H. Curran Associates, LLC, with offices in Austin, Boston, New York & London, represent a wide variety of individuals, businesses, corporate entities, and governmental agencies in litigation and transactional matters throughout the United States and Western Europe. We have navigated a broad range of commercial litigation cases, including cross-border insolvency, institutional creditors’ rights, bet-the-company litigation, and have earned a winning track record throughout the United States.
+1 (617) 207 8670 tcurran@thcalaw.com irglobal.com/advisor/thomas-h-curran
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