Corporate resilience and turnaround trends in 2025

The Institute for Turnaround’s (IFT) 2025 Societal Impact Report shows the UK corporate landscape is still under significant strain. Distress levels are high across most sectors, with real estate and energy experiencing increases of more than 20%. Inflation, supply chain volatility, management fatigue and economic uncertainty continue to erode resilience.

Yet, the report highlights a positive counternarrative: turnaround efforts are working. In 2025, IFT members generated £2.8bn in added shareholder value, secured over £2bn in new turnaround funding and safeguarded over 59,500 jobs. The message is clear: even in uncertainty, businesses can stabilise, improve and transform through targeted intervention, governance reform and decisive leadership.

For national restructuring and insolvency practices, the report reinforces the value of regionally attuned advisory support, early engagement and a strategic understanding of sector and regional distress trends.

Key themes in the IFT Societal Impact Report

• A structurally strained economy: distress is broad-based, affecting almost every UK sector and revealing long-term challenges rather than short-term shocks. Of the 21 sectors in the report, only manufacturing saw a fall in distress, down 3%
• Regional disparities in distress: the report highlights that Wales saw the largest increase in business distress, showing pressures are not only sector-specific but geographically uneven. Access to finance also differs outside London, generally showing a reduced appetite for risk and slower refinancing decisions
• Operational pressures: inflation, energy costs, fragile supply chains and leadership fatigue continue to create pressure across industries. This is driving reliance on alternative capital providers and private credit funds whose terms are often more aggressive
• Governance and transformation as resilience levers: the report stresses that turnaround is not just a crisis response but a structured transformation process centred on strong governance, leadership capability and operational adaptability. In a recent study, three-quarters of IFT members said their key focus was improving governance and control
• Funding and value creation: despite uncertainty, IFT members continue to lead successful restructuring efforts, deploy capital into turnaround situations and deliver measurable improvements in shareholder value and job protection
• The importance of early recognition and intervention: many organisations act too late, risking loss of strategic options and increasing legal exposure.

Legal perspective

• Director duties and decision-making under strain: as distress becomes more pervasive, directors’ legal duties – particularly the shift from shareholder to creditor interests as insolvency approaches – become more significant. Delayed decision-making increases risks around wrongful trading and misfeasance
• Governance structures and accountability: the report’s emphasis on transformation underscores the need for boards to maintain robust governance frameworks. Poor oversight or inadequate risk management can lead to regulator scrutiny, shareholder challenge or reputational harm
• Contractual fragility and supply chain risk: volatile supply chains and rising costs heighten the risk of contractual breaches. Reviewing key contracts, such as supplier agreements, energy contracts, leases and financing arrangements, is essential to identify exposure, renegotiation triggers or termination risks
• Restructuring, funding and stakeholder rights: increased turnaround activity naturally intersects with legal work around refinancing, covenant variations, security reviews and stakeholder management. The Part 26A Restructuring Plan regime is seeing increasing use by SMEs under financial distress.

The report’s emphasis on leadership, risk culture and governance maturity underlines the increasing overlap between legal duties and strategic oversight. Weak board engagement or inadequate documentation can significantly raise litigation and regulatory risk during distress.

Actionable recommendations

• Implement early warning systems
• Refresh governance and oversight
• Conduct a contract audit
• Prepare a restructuring roadmap
• Strengthen workforce planning and compliance
• Enhance disclosure discipline
• Embed transformation as a long-term risk mitigation.

The IFT also recommends investing in leadership development, succession planning and decision-making capability to reduce crisis-driven behaviours, which can create avoidable legal exposure.

Conclusion

The IFT’s 2025 report confirms distress is now a structural feature of the UK economy. For restructuring and insolvency lawyers, understanding regional variations, sector vulnerabilities, lender behaviour and emerging risk patterns strengthens the quality of advice and the speed of intervention.

Businesses that act early, reinforce governance and adopt integrated legal and commercial strategies will be best placed to navigate the year ahead. As pressures continue, turnaround specialists and the lawyers who support them will become increasingly central to protecting value and preserving viability.