COVID-19 pandemic & recovery
INSOL International leaders agree this issue has a long period to run and has many dimensions
The long run of the pandemic, its ubiquitous impacts, and how we recover will frame agendas for the decade. Perspectives on the nature and scope of the impacts are influenced by role, location and outlook.
Economy
Supply chain issues, inflation risk, debt ratios, significant industry restructuring and a sense that this is more serious in 2022 and beyond than in the latter part of 2021
Equality
Capacity of global governance to generate equality of protection through vaccinations, loss of recent progress in genuine progress indicators, digital divide between developed and developing economies increased as digital transformation accelerated
Wellbeing
Significant mental health risks and impacts, critical importance of leadership, resilience and agility
Rapid changes to insolvency
Agreement that government funding and moratoriums crippled the traditional insolvency industry, there is a loss of government appetite for insolvency which challenges us to rethink services
Lessons for the future
This pandemic might have been much more severe so lets analyse the different approaches and outcomes, and learn the lessons for next time.Summary of World Bank research
- Strong but uneven recovery is occuring, and recovery is not assured
- Resumption of growth will not address the heightened inequality impacts of the pandemic on vulnerable people and economies
- Vaccine IP access, production, distribution and deployment are key
- Careful attention to debt, capital flow for productive purpose, effective domestic revenue mobilisation and robust medium term fiscal frameworks recommended
World Bank Global Prospects Report 2021
Recovery is a unique opportunity for green, resilient and inclusive development. - World Bank
Implications for our industry
INSOL International leaders interviewed generally recognise that insolvency is changing, globally. Quite a few noted insolvencies have changed over the last 20 years. Leaders see a move away from more process-based defaults and bankruptcies to a far more collaborative approach, willing to look at restructurings to get a better outcome. This is expected to continue and possibly accelerate.
Economic impact
Recognition that the economic impact of COVID-19 has more time to run, with continued outbreaks, less government support, and aftershocks of inflation, supply chain disfunction, debt crises, asset bubbles and capital liquidity.
Prevention not cure
Growing sense that it is time to shift systems and practice to prevention rather than cure. Members as crisis managers with simpler, cheaper mechanisms, which will require new business models and value propositions and effective collaboration between practitioners, legislators, regulators, investors, entrepreneurs, judiciaries.
Global frameworks
Recognition of the variation of frameworks across the globe, the need for updates in many jurisdictions, and the value of completing a global framework that offers informal as well as formal mechanisms for crisis management.
Centres of excellence
Some governments are positioning to be regional and/or global centres of excellence to attract greater investment and business
Opportunities
Strong focus on opportunities in emerging areas and developing economies – Africa, South America, Asia. Real engagement now from governments on law reform, so what comes next? There is an opportunity for INSOL International and partner organisations to strengthen capacity building. Local professionals are sensitive to offshore competitors.Strategy shaping questions
How will the shape of recovery shift insolvency and restructuring trends?
Will we see the end of insolvency as we know it?