Debt Workouts in Europe to Peak in 2026, EY-Parthenon Poll Shows

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(Bloomberg) — Bankers expect debt restructuring activity to ramp up over the next six months in Europe as companies come under pressure from slowing sales, a sluggish economy and rising energy and materials costs, according to a survey by EY-Parthenon.

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Almost half of restructuring professionals in the consultancy firm’s latest survey expect to see a peak in corporate restructuring situations in the first half of 2026. That marks a meaningful shift from EY-Parthenon’s March report, when a majority of bankers saw activity peaking before the end of 2025.

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The later peak comes as expectations for an economic recovery in the region get pushed out and as lenders — especially private credit firms — become more picky, according to EY-Parthenon.

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Some stressed companies may have been able to avoid debt restructurings this year due to an abundance of liquidity, but “funds are becoming more selective and for lower-quality borrowers it will be more expensive,” said Henry Beech, a partner in EY-Parthenon’s Turnaround and Restructuring Strategy team.

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Bankers in the survey expected companies in the automotive and manufacturing sectors to see the most restructuring activity in the second half of 2025. Construction and building materials was the third group on the list, although there has been some stabilization in that industry, the report said.

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Automotive companies have long been seen as vulnerable due to their high costs and thin margins, while falling demand and trade tensions have piled on more pressure this year. Among situations in the sector, Germany’s Webasto got unanimous consent last month for a restructuring deal in which lenders agreed to provide an additional €200 million ($231 million) of loans and extend €1.2 billion of existing credit lines through the end of 2028.

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Read: Automotive Industry Is Most Vulnerable to Distress, Survey Finds

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Competition from China, weak domestic demand and tariff pressures earlier this year have made for “a very challenging cocktail” in industries including automotives, steel and electronics, according to Ben Trask, another partner in EY-Parthenon’s team.

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EY-Parthenon surveyed 191 restructuring professionals across Europe during September.

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