Dealing With Distressed M&A In Luxembourg

As companies come to terms with rising interest rates in the wake of increased inflation, Frédéric Lemoine and Ana Nicoleta Andreiana from Loyens & Loeff outline the main issues faced when dealing with distressed M&A and how buyers may best mitigate the associated risks.

The geopolitical uncertainties initiated by Russia's invasion of Ukraine in February 2022, compounded by the recent conflict in the Middle East, the increase in inflation leading to central banks raising interest rates, a volatile consumer market and post-pandemic uncertainties in the labour market have created an explosive combination for companies, particularly those heavily reliant on financial leverage.

Having become accustomed to an abundance of low-cost debt for more than a decade, companies are now confronted with a new reality as interest rates rise. This new reality puts enormous strain on companies' ability to: