2023 Restructuring Market Outlook and the Healthcare Industry

Welcome to the seventh Pari Passu newsletter,

Thank you for being a subscriber.

Today, it is going a be a bit different from usual, we will read about the 2023 Restructuring Outlook with a final deep dive into the Healthcare industry.

2023 Restructuring Outlook

In a previous Instagram post, we covered high-level takeaways of the 2022 and 2023 restructuring themes (Petition 11 – BK Pros Weigh In on 2022, January 21st). Important takeaways included that the industries of focus in ’23 will be Healthcare and Auto, with lender-on-lender continuing into ’23 but dying down from the levels we saw occur historically with Trimark USA, Serta Simmons, Incora, and Boardriders. This newsletter will be providing a deeper dive into a ’23 restructuring outlook, beginning with summarizing the takeaways from PWC’s 2023 outlook and then diving deeper into the lingering effects of the pandemic and the potential repercussions of cheap corporate debt. Moreover, we will investigate specific distressed trends such as distressed health care.

Why do Businesses End Up in Distressed?

Before jumping into the newsletter, individuals newer to RX need to understand the various reasons that make a businesses end up in distress. The most common reasons include [1] companies raising unsustainable amounts of debt, which may lead to insuperable maturity walls, missing interest payments, or blowing by covenants. Moreover, [2] changes in regulatory environments, such as new policies might render the company’s competitive advantage unsustainable, or [3] changing market developments, such as technological developments or industry consolidation might make a company’s business model less competitive. Furthermore, [4] macroeconomic downturns creating intolerable headwinds may result in distress, or [5] the companies existing legacy cost structure, such as union contracts, pension obligations, or other existing costs might limit liquidity and financial flexibility. Lastly, [6] a failed execution of an acquisition, or [7] a company might be facing overwhelming liabilities due to tort or other civil claims.

Pari Passu is a reader-supported publication. To receive new posts and support my work, subscribe below for free. If you want access to the entire archive, upgrade to premium.

Pari Passu is a reader-supported publication. To receive new posts and support my work, subscribe below for free. If you want access to the entire archive, upgrade to premium.

Recap of 2022, what this means for 2023?

Subscribe to Pari Passu Premium to read the rest.