According to AlixPartners’ 10th annual North American Restructuring Experts survey, 2016 may see an uptick in restructurings and corporate bankruptcy filings.

In this year’s survey, 95% of respondents cited “low interest rates and the ability for companies to get additional financing” as the top reason why the number of overall chapter 11 filings continued to decrease last year.

Pre-packaged and pre-negotiated bankruptcies continued to rise, and this is a trend experts expect to continue. Of those surveyed, 98% said they expect pre-packaged or pre-negotiated bankruptcies to increase or remain the same in 2016.

When asked about the effect of China’s economic slowdown on the U.S. market, three out of four survey respondents said China’s slowdown will have a “significant” or “moderate” effect on U.S. restructurings, pointing to the potential ripple effect the Chinese economy has around the globe.

“China’s economic slowdown has contributed to the global imbalance in supply and demand which has driven down commodity prices. Companies in the oil and gas and mining industries, for example, are suffering from these lower prices.” said Jim Mesterharm, managing director at AlixPartners and co-head of the firm’s turnaround and restructuring services practice for the Americas. “Steel and aluminum are two examples of industries that have pressure on their capital structures because even though the costs of their raw materials have declined, in some cases the prices of their finished products have declined more.”

When it comes to the energy market, oversupply around the world and diminished demand from many emerging markets continues to weigh on the industry, pointing to more possible distress in the year ahead. Bankruptcy is the most likely outcome for energy companies in distress, according to 41% of respondents, while 31% suggest out-of-court restructurings will be the most common action. Twenty-six percent said distressed energy companies will be most likely to liquidate through asset sales.

“Low natural gas prices are also negatively impacting power and energy, solar, and renewables as the economic choice for clean energy is currently less compelling,” said Lisa Donahue, managing director at AlixPartners and global leader of the firm’s turnaround and restructuring services practice. In the US, respondents say energy (86%), retail (46%), healthcare and medical (24%), education (22%) and municipalities (18%) are the sectors most likely to face distress in 2016.

Looking globally, respondents say energy (86%), sovereign debt (39%), maritime (30%) and retail (23%) will be the most distressed sectors.
When asked which regions outside the U.S. would have the most restructuring opportunities in 2016, the most common response was Brazil, cited by 37% of respondents.

“Brazil’s economy faces many restructuring challenges as it sorts out the effects of its dramatic 2015 decline. That decline was marked by plunging prices for its principal commodity exports, including oil, metals and sugar,” said Donahue. “Brazil’s post-boom economy, coupled with a sharp drop of the Brazilian real against the US dollar, means bright spots are scarce, and that virtually every sector of the economy will be under pressure.”

AlixPartners is a global business advisory firm.