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Why corporate restructuring can lead to seizing opportunities in 2026

Insights from US Restructuring Outlook 2026

In 2026, rates may ease, but pressure will not disappear. Turnaround and restructuring will hinge on execution, not optimism. Our 2026 US Restructuring Outlook explores how liquidity, refinancing, and operating performance collide when working capital strain turns manageable issues into urgent ones. Explore strategic insights to capitalize on corporate and debt restructuring opportunities in the coming year.

How 2025 shaped the future of US restructuring

Distress remained broad-based through 2025, but it shifted from sudden liquidity collapses to slow-burn balance-sheet stress as borrowers navigated higher coupons, selective refinancing windows, and margin compression. Filing momentum continued into year-end, which looks to support a steady restructuring pipeline entering 2026. Key stress concentrations remain in industrials, consumer discretionary, and health care, with more visible pockets of distress emerging in consumer staples.

Key drivers shaping restructuring in 2026

Several key factors are poised to shape both the volume and the form of restructuring activity, including:

  • Inflation expectations continue to cool, and the Fed’s policy interest rate is projected to drift lower. As a result, 2026 should offer a more constructive backdrop for capital markets access. In late 2025, market-based measures remained near long-run targets, with five-year breakeven around 2.25% and five-year-by-five-year forward expectations coming in around 2.24%. 
  • Consumer inflation expectations are moderating, with a University of Michigan survey showing one-year-ahead expectations at 4.2% in December 2025 and long-run expectations at 3.2%. At the same time, operating cost inflation remains elevated. The Employment Cost Index is up about 5.4% since early 2024, intermediate manufacturing input prices increased by 4.6%, and labor supply is less supportive, with the civilian labor force rising by only about 0.5% in 2025.
  • Trade policy became a more significant factor in 2025, as US tariff actions shifted quickly and frequently. Average effective tariffs rose, but more acute pressure came from heightened uncertainty and planning risk. The Economic Policy Uncertainty Index rose from 1,319 at the end of 2024 to a 7,955 peak in April 2025, and ended 2025 at 3,173. Tariffs also drove downstream distress through inventory dislocations, rerouting costs, softer demand, and procurement and logistics disputes.
  • Direct lending and other private credit structures remained a meaningful driver of restructuring activity as the market grew and borrower stress became more visible. Credit metrics also weakened during 2025: About 12% of borrowers now have negative cash flow and about 13% have interest coverage below 1.0 times, compared with roughly 7% to 8% one year earlier.
  • Payment-in-Kind (PIK) interest can manage near-term cash interest, but it compounds leverage and can accelerate complex restructurings if performance does not improve. In 2026, we expect further weakening, with margin compression and higher leverage keeping downgrades elevated and driving additional defaults.
  • Consumer confidence remained low throughout 2025: the University of Michigan Consumer Sentiment Index fell from 74 at the end of 2024 to 51 as of November 2025. Consumer spending nevertheless showed resilience despite subdued optimism, with real consumption growth projected at 2.1% for the year ending in 2025. 
  • Deloitte forecasts a slowdown to 1.4% in 2026 as households contend with high interest rates and weaker job growth. Wage growth has recently outpaced spending, but rising delinquency rates and slowing employment gains point to growing working capital strain.

2026 investment opportunities and economic reacceleration

Key drivers shaping sectors in 2026

What’s ahead

As 2026 gets underway, we expect conditions to evolve at two speeds. Headline inflation is likely to improve, and the Fed’s policy interest rate may decline gradually. However, volatility may persist in trade policy, commodity inputs, and labor availability, particularly for service-intensive sectors.

Tailwinds

Cooling inflation expectations and a gradual drift lower in policy rates should support capital markets access, especially for high-quality credits and for “good business, bad balance-sheet” situations.

Headwinds

While trade and tariff uncertainty remains a meaningful planning risk, operating cost inflation is elevated and labor availability stays tight.

Implications for restructuring mix

We expect fewer “maturity wall” liquidity events, but more restructurings driven by operating underperformance, event risk, and capital structure mismatches. Restructuring activity is likely to increase modestly in 2026 and, at a minimum, remain similar to 2025.

Themes to watch

AI execution risk (data rights and governance, vendor concentration, integration and run-rate costs) can drive outcomes for debtors and creditors. Economic reacceleration could keep inflation elevated and delay easing, shifting distress toward balance-sheet complications, especially in thin-margin sectors. Cross-border Chapter 11 filings should remain elevated as non-US companies seek predictability and restructuring tools.

To gain deeper turnaround and restructuring insights, download the full US Restructuring Outlook 2026 report.

Get in touch

Ryan Maupin

Ryan Maupin

Turnaround and Restructuring Leader
+1 973 602 6379
Tom Bibby

Tom Bibby

Managing Director
+1 214 244 7641