Where capital retreats, insolvency and restructuring claims step forward

Since late February, the conflict involving Iran has pushed oil prices back above $100 per barrel, with disruption to infrastructure and shipping routes through the Strait of Hormuz affecting a significant share of global energy flows. The effects are not abstract. Gas and fertilizer prices have moved sharply, for example, European gas benchmarks are up close to 60%, while urea prices in the Middle East have risen by more than a third. 

Those moves are now working through balance sheets. For many businesses in energy-linked sectors such as chemicals, construction materials and transport, margins are being squeezed while working capital requirements increase. Contracts priced on last year’s assumptions are being performed in a very different cost environment. In some cases, that is leading to disputes over pricing mechanisms, supply obligations or force majeure provisions. In others, it is accelerating refinancing discussions or bringing forward restructuring processes.

For insolvency practitioners, the same pressures are appearing earlier in the lifecycle of distress. Situations that might previously have stabilized for longer are moving more quickly into formal processes, with less headroom on liquidity and fewer straightforward refinancing options available at the outset.

At the same time, access to capital is becoming more uncertain. While higher base rates were already a factor coming into 2026, what has changed more recently is the level of caution in credit markets. Financing processes are taking longer, terms are being revisited late in negotiations and in some situations capital is no longer available on the same scale. Data from ratings agencies and market participants points to a steady increase in default risk and a more selective approach to new lending.

For restructuring professionals, this creates a familiar constraint, but in a more compressed timeframe. Stabilizing a business in distress has always depended on access to capital, whether through refinancing, new money or asset sales. Where that capital is harder to secure, more expensive, or slower to deploy, the range of viable options narrows.

Where the pressure is showing

One of the clearest developments in current situations is how quickly disputes are moving closer to the center of the analysis.

Rapid changes in input costs are putting strain on long-term supply agreements. Disruption to logistics and trade routes is affecting performance, while sanctions and regulatory responses are adding further complexity to cross-border arrangements. The result is a growing number of situations where value is tied up in claims, sometimes alongside, and sometimes instead of, more traditional restructuring levers.

This is playing out across both corporate and insolvency mandates. Manufacturers exposed to energy and commodity inputs are revisiting contracts entered into on very different assumptions. Infrastructure and construction projects are encountering cost overruns. At the same time, officeholders are moving more quickly to assess potential claims against former directors, sponsors and third parties in formal insolvencies.

Where liquidity is tight and recoveries from core assets are uncertain, asset recovery actions, including claims relating to transactions, conduct and value leakage, are being prioritized earlier in the process. Investigations that might previously have developed over time are now being scoped and advanced at an earlier stage, as part of a broader effort to identify sources of recovery.

In this environment, the legal position is not secondary. It is central to how value is ultimately realized.

Using claims as a source of liquidity

Against that backdrop, there is a noticeable shift in how claims are being approached.

Where a business has a credible claim, the discussion is increasingly about whether part of that value can be brought forward, not just realized at the end of a process that may take years. Structures that allow companies to access capital against those claims, while continuing to pursue them, are being looked at more closely.

In current conditions, the appeal is straightforward. Capital linked to a specific asset does not depend on overall borrowing capacity in the same way as conventional financing. It can provide liquidity without adding further pressure to already stretched balance sheets, while allowing businesses to pursue material claims, without diverting cash from operations.

This is particularly relevant in sectors currently under pressure from energy and input costs. In many situations, claims arising from supply contracts or pricing disputes are significant, but so too are the costs of pursuing them. The ability to advance those claims while also supporting day-to-day operations is a practical concern.

Implications for insolvency practitioners

For insolvency and restructuring professionals, the same dynamic applies within tighter constraints.

Officeholders are often tasked with pursuing claims as a means of generating recoveries for creditors. The question is how to do so in a way that is proportionate to the estate and aligned with creditor interests, particularly where funding is limited and outcomes are uncertain.

In the current environment, those considerations are more acute. Realizations from asset sales may be lower or slower, costs are under closer scrutiny and the need to act quickly, whether to preserve claims, secure evidence or prevent further dissipation of assets, is more pressing.

External capital to support claims is therefore becoming a more routine part of the toolkit. Funding arrangements can allow officeholders to pursue claims on a non-recourse basis, with costs and risk borne outside the estate and returns aligned with recoveries.

Merits remain central, but access to funding changes what can be pursued in practice. Claims relating to director conduct, antecedent transactions or asset tracing, previously constrained by cost, can be advanced in a commercially viable way.

Creditor dynamics remain important. While direct capital injections remain relatively uncommon, there is increasingly willingness . to engage with structures that can enhance recoveries without requiring that step, particularly where outcome alignment and transparency are clear.

A more constrained credit backdrop

These developments sit within a wider shift in credit conditions.

Higher interest rates have already increased the cost of servicing existing debt, while rising  energy and input costs add further pressure on cash flows. At the same time, lenders are approaching new situations with greater caution, applying more selective underwriting and closer scrutiny of downside risk.

Credit remains available, but it is more selective, expensive and slower to deploy. Refinancing processes are becoming more complex, and outcomes less certain, enough, in some cases, to accelerate restructuring discussions or formal insolvency processes.

In that environment, reliance on a single source of capital becomes more difficult. Businesses and their advisers are looking more closely at assets that can be used to support liquidity, particularly where those assets are not already encumbered or dependent on traditional lending markets.

Legal claims fall into that category. Their value is linked to specific rights and outcomes, rather than to the overall credit profile of the business. That makes them, in certain situations, one of the few assets against which capital can be raised without increasing leverage or competing directly with existing lenders.

Looking ahead

The immediate drivers of current discussions, higher input costs, tighter liquidity and more cautious lending, are unlikely to resolve quickly. Even if energy prices stabilize, assumptions around risk have shifted for both borrowers and lenders.

For businesses, that means continuing to manage through cost pressure while maintaining access to liquidity. For insolvency and restructuring professionals, it means working within tighter constraints while still seeking to maximize value across all available avenues.

Within that, the role of disputes, claims and asset recovery is becoming more prominent. Not as a secondary consideration, but as a core part of how liquidity is generated and recoveries are achieved.

In conversations ahead of INSOL, we are increasingly seeing claims discussed as a source of liquidity. They are grounded in immediate, practical questions: How to fund claims, how to pursue recoveries efficiently and how to generate cash in a more constrained environment.

Where capital is harder to access and more expensive when it is available, the ability to realize value from claims, including those against former directors and third parties, is becoming an increasingly important part of how situations are managed.