The current scenario had already been hinted at in previous surveys: in the restructuring hit list, the "vehicle construction and accessories" sector had recently moved ever further forward. In the current survey, it jumped to first place for the first time and has caught up with the problem sector "textiles and clothing". After a significant leap, "Mechanical and Plant Engineering" took third place.

This means that two German core industries are now among the three largest problem industries.<<

Georgiy Michailov,
Managing Partner at Struktur Management Partner

According to the bankers, the main sufferers of the processes of change in the automotive industry are less the car manufacturers themselves. Global suppliers are also believed to be capable of mastering change. However, this does not apply to the suppliers of the suppliers (Tier 2 and Tier 3). The restructuring experts see the biggest problems in these two clusters. Often financial gaps appear, which usually hit the smaller and medium-sized providers harder than the larger ones. The answers show that this is already a problem for many suppliers. The main reason stated for the crisis was liquidity problems, i.e. a crisis stage that was already well advanced.

Sharp rise in new cases – banks pull rip cord

"The strikingly pessimistic assessment of the restructuring experts shows that a significant economic downturn is expected," says Georgiy Michailov.

As far as the chances of success of restructuring cases are concerned, it is becoming apparent that less and less is being returned to the market. Compared to the previous survey, the number of those who released more commitments from the "intensive care unit" into the market segment fell to 18 percent. This is the lowest level since the beginning of the surveys. Those who reported an increase in the number of insolvencies in the crisis cases they handled also rose by 10 percentage points to 17 percent. The ability to finance restructuring cases is also seen as much more difficult than in previous years. Banks are now more willing to accept write-downs on existing exposures. 56 percent of the restructuring experts surveyed were of this opinion. "This is bad news for companies, as financial institutions are now more willing to pull the rip cord," says Georgiy Michailov. However, if there is a rapid increase in new crises, the banks could find themselves in a dilemma: Only 13 percent of the bankers surveyed believe that there are enough well qualified restructuring consultants in the market to cope with an increasing number of cases.

The challenge of digitalisation

When asked which exogenous factors the restructuring experts consider to be the most problematic for the companies they support, digitalisation ranks first. For 73 percent of respondents, this topic is important or very important. The dangers to global trade posed by protectionist tendencies are also regarded as high (63 percent). Weakening growth in the euro zone was ranked third.

The respondents consider these exogenous risks to be the most problematic for the companies they support:

  • 73%
  • 50%
    Weak growth in the euro zone
  • 33%
    Survival of the euro zone
  • 63%
    Protectionist tendencies
  • 49%
    Repercussions from Brexit
  • 27%
    Banking crisis
Considered "important"/"very important".
Source: Restructuring Barometer

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