The IFT Quarterly Update Q2 2025: busier quarter for turnaround and restructuring with energy sector showing greatest demand; some more encouraging company distress data

IFT survey data showed a somewhat busier quarter for turnaround and restructuring activity in Q2 2025.  67% of survey respondents were busier in Q2 than in Q1, with the rest seeing about the same level of activity.

The busiest sector for IFT partners in terms of turnaround and restructuring activity in Q2 2025 was the energy sector, followed by an even split between construction (which had previously seen a dip in activity according to Q1 survey data), private education, financial services, manufacturing and real estate. This heightened activity in the energy sector may reflect the multiple and varying pressures on the sector, including investment requirements, ongoing geopolitical uncertainty and recent jumps in UK inflation.  Overall, inflation, the impact of government policy and a changeable geopolitical environment also continue to drive demand for turnaround support across a wide range of sectors

According to FRP Advisory data there were 5762 insolvencies across all UK regions in Q2 2025. This represented a continued decrease compared to previous quarters and a drop of 6.4% compared to the Q1 2025 figure (revised figure of 6159).  There was a very small increase in numbers of distressed companies in the FRP data to 185,851 for Q2 2025, a 0.06% increase on the Q1 figure of 185,734.  This seems to represent a slowing in increasing levels of distress, but it remains to be seen if this is sustained in later quarters or whether this represents a boost from the strong levels of growth and potentially “crowded in” investment of Q1. Construction and professional, scientific and technical activities remained the top two distressed sectors (as in Q1 2025); however, real estate activities overtook the retail and repairs sector as the third-most distressed sector.

Q2 of 2025 saw – albeit dampened – UK GDP growth of 0.3%, and according to FRP data, both falling numbers of insolvencies and a reduction in the rate of companies reaching indicators of distress. However, levels of both remain historically high and H2 2025 may prove challenging for many UK businesses and sectors, with the key challenges highlighted by IFT partners being the cost of servicing debt and depletion of working capital, as well as inflationary pressures, debt maturity and withdrawal of shareholder support.

You can find the full update here.