Global business insolvencies are forecast to rise a further 5% in 2026, marking a fifth consecutive annual increase and leaving corporate default rates approximately 24% above their pre-pandemic average, according to the Allianz Trade Global Insolvency Outlook 2026–27. Against that backdrop, creditors who rely on informal payment expectations or delayed enforcement action face a materially higher risk of recovering nothing at all. Understanding the legal tools available across jurisdictions – and deploying them in a disciplined sequence – is now a core element of credit risk management rather than an optional last resort.
Why the Current Cycle Demands a Different Approach to Debt Collection
For most of the post-2010 period, ultra-low interest rates, generous government support schemes and broadly liquid credit markets masked underlying payment stress in corporate supply chains. That masking effect has unwound. The Atradius Payment Practices Barometer 2026 reports that nearly four in five Western European firms are experiencing late payment, with 47% of all B2B invoices overdue. In Central and Eastern Europe the pressure is more acute still: 83% of suppliers in that region report being affected by payment delays.
These are not abstract survey numbers. They signal that the creditor who waits for a customer to self-correct before initiating formal debt collection steps is now operating in a different risk environment from the one that shaped standard credit terms five or ten years ago. The probability that a debtor's financial position deteriorates further between the first missed payment and the moment a creditor files a claim has increased markedly.
For companies with cross-border exposures, the position is compounded by jurisdictional asymmetry: the substantive rules governing late payment interest, limitation periods and priority in insolvency differ significantly across legal systems, and the debtor's choice of booking entity, governing law or place of incorporation can alter the practical outcome of enforcement considerably.
The Legal Toolkit: From Unpaid Invoice to Enforcement of Judgment
Effective recovery in a rising insolvency cycle requires creditors to think in terms of a sequenced legal strategy rather than a single procedural step. The principal instruments available in most developed legal systems are outlined below.
Payment Orders and Summary Proceedings
Many jurisdictions offer an expedited payment order procedure for undisputed or documentary debts. Within the European Union, the European Payment Order Regulation (Regulation (EC) No. 1896/2006) allows a creditor to obtain an enforceable order across Member States without a full trial, provided the claim is uncontested. The procedure is valuable precisely because speed matters when a debtor is deteriorating: an order obtained in weeks, rather than months, preserves options that may otherwise close.
Outside the EU, the availability and speed of equivalent procedures varies. Some common law jurisdictions offer summary judgment applications on affidavit evidence; others require the creditor to issue full proceedings and then apply to strike out a defence. Assessing which route is faster and which carries the lowest risk of procedural delay is a threshold question that should be answered before proceedings are issued.
Asset Freezing and Interim Relief
Where there is a real risk that a debtor will dissipate assets before judgment, asset freezing orders – known in England and Wales as freezing injunctions, and as saisie conservatoire or similar in civil law jurisdictions – can be sought on an urgent basis, often without notice to the debtor. The legal thresholds differ by jurisdiction, but the common elements are a good arguable case on the underlying claim and evidence of a real risk of dissipation.
In cross-border situations, interim relief obtained in one jurisdiction may need to be recognised and given effect in another. Within the EU, the European Account Preservation Order (Regulation (EU) No. 655/2014) provides a specific instrument for freezing bank accounts across Member States without prior notification to the debtor. Outside that framework, the process typically requires a separate application in each relevant jurisdiction, which reinforces the case for early and coordinated action.
Enforcement of Judgment Across Borders
Obtaining a judgment is only half the task; converting it into recovered funds requires enforcement of judgment where the debtor holds assets. The mechanisms depend on whether a bilateral or multilateral treaty framework applies, whether the judgment creditor can rely on EU instruments such as the Brussels I Recast Regulation (Regulation (EU) No. 1215/2012) for recognition within the EU, or whether it must pursue common law recognition proceedings or a separate domestic action in a non-treaty jurisdiction.
A creditor holding a judgment against a debtor incorporated or operating in Ireland, for example, can draw on both EU enforcement mechanisms and the procedural infrastructure of a common law system. The interaction between those frameworks raises specific questions around enforcement timelines and asset identification that are worth examining at the outset of any matter. Our analysis of debt recovery procedures in Ireland sets out the key steps in that jurisdiction.
Late Payment Interest and Its Strategic Value
Across the EU, Directive 2011/7/EU on combating late payment in commercial transactions sets a minimum statutory late payment interest rate tied to the European Central Bank reference rate plus a margin, and provides for a fixed minimum compensation amount per invoice. Member States may, and often do, implement more creditor-favourable rules at the national level.
Interest and compensation provisions serve two functions. First, they increase the recoverable sum in a successful claim, which matters when enforcement costs are material relative to the principal debt. Second, they alter the debtor's incentive to delay: where late payment interest accrues at a meaningful rate, the cost of continuing to withhold payment rises over time. Creditors who do not claim interest routinely forfeit a legitimate and often significant component of their recovery.
Insolvency Proceedings as a Collection Tool – and a Risk
When a debtor is insolvent or approaching insolvency, the creditor faces a fundamentally different strategic environment. Filing, or threatening to file, a winding-up petition or equivalent insolvency application can sometimes prompt payment in cases where ordinary civil proceedings have not. However, this approach carries risks that are often underestimated.
In many jurisdictions, a creditor who initiates insolvency proceedings against a debtor that subsequently enters a formal restructuring or administration may find its claim ranked alongside other unsecured creditors, with recovery depending on the realisable value of the estate. A secured creditor, or a creditor who has taken a personal guarantee or obtained a prior charging order, may be in a materially better position. The decision to trigger insolvency proceedings rather than pursue judgment and enforcement therefore requires careful analysis of the creditor's security position, the debtor's asset profile and the likely outcome of a formal process.
There is also a cross-border dimension to consider. The EU Insolvency Regulation (Regulation (EU) 2015/848) governs which Member State's courts have jurisdiction to open main insolvency proceedings and how secondary proceedings in other Member States interact with them. The concept of the debtor's "centre of main interests" (COMI) determines jurisdiction and, with it, which national insolvency law applies to questions of avoidance, priority and creditor rights. Debtors sometimes seek to shift their COMI in anticipation of financial distress; recognising this possibility early can influence a creditor's enforcement choices.
For a broader perspective on how restructuring frameworks interact with creditor enforcement rights, our bankruptcy and restructuring practice provides further context on the options available to both debtors and creditors across jurisdictions.
If you are assessing the position of a specific debtor or portfolio of receivables in the current environment, our team is available to discuss the options. Please contact us at info@ferrazwhitmore.com or visit our contacts page.
Cross-Border Complications: Governing Law, Jurisdiction Clauses and Parallel Proceedings
International B2B contracts frequently contain choice-of-law and jurisdiction clauses that were negotiated years before the current insolvency cycle was foreseeable. In some cases, the clause may designate a jurisdiction that offers fewer procedural advantages than an alternative forum where the debtor holds assets. In others, a clause that was intended to be exclusive may turn out to be permissive as a matter of the applicable private international law rules, opening the possibility of proceedings in a more favourable forum.
Parallel proceedings – where a creditor pursues enforcement in multiple jurisdictions simultaneously – can be legitimate and effective, but they require coordination to avoid conflicting orders and to manage the risk of a court in one jurisdiction declining to act on the ground that proceedings elsewhere are already on foot. The applicable rules differ between EU Member States (where the Brussels I Recast and Insolvency Regulations impose coordination obligations) and third countries (where comity principles and domestic rules govern).
Currency risk is a further practical consideration. Where a judgment is denominated in a currency other than that of the jurisdiction in which it is to be enforced, conversion mechanics and exchange rate movements between the date of judgment and the date of actual recovery can materially affect the net sum received. This is particularly relevant for creditors operating across the eurozone boundary or recovering against debtors in emerging market jurisdictions.
Strategic Priorities for Creditors in 2026 and Beyond
The combination of rising insolvency rates, widespread late payment and tightening credit conditions calls for a more systematic approach to receivables management and enforcement strategy. Several priorities stand out.
- Early legal review of aged receivables: Limitation periods vary by jurisdiction – commonly between three and ten years, but shorter in some commercial contexts – and begin to run from the date the debt falls due or the date of last acknowledgment, depending on applicable law. Waiting until a debt is already significantly aged narrows the available options.
- Security and guarantee audits: Creditors with existing relationships should review whether they hold enforceable security or guarantees, and whether those instruments have been properly perfected under the relevant national law. An unperfected security interest may rank as unsecured in insolvency.
- Jurisdiction-specific procedural mapping: Before issuing proceedings, identify where the debtor holds liquid assets, which courts have jurisdiction under the applicable clause and treaty framework, and which procedural route – payment order, summary judgment, interim injunction – offers the best combination of speed and enforceability.
- Monitoring debtor financial health: Many jurisdictions require companies to file periodic financial statements that are publicly accessible. Systematic monitoring of debtor filings can provide early warning of deterioration before formal insolvency proceedings begin, when a creditor's options are still wider.
- Coordinated cross-border action: Where a debtor has assets or operations in multiple jurisdictions, appointing coordinating counsel across those jurisdictions – rather than instructing separate local firms without a common strategy – significantly reduces the risk of contradictory positions and wasted procedural steps.
The Atradius and Allianz Trade data cited above reflect conditions across Western Europe and CEE as of their respective 2026 publication dates. The trajectory they describe – persistently elevated late payment and continuing insolvency growth – is consistent with a structural rather than cyclical shift in payment behaviour, which means the strategic adjustments outlined here are likely to remain relevant throughout 2026 and into the following period. A more detailed analysis of the Western European late payment environment appears in our alert on the Atradius 2026 Barometer findings.
Outlook: What the Insolvency Cycle Means for Creditor Rights
A sustained rise in global insolvencies reshapes the competitive dynamics among creditors as much as it affects debtors. Secured creditors, those who have obtained judgment early, and those with effective monitoring processes in place tend to recover more, and more quickly, than unsecured creditors who enter the process late. The legal frameworks exist to support active creditors; the question is whether those frameworks are used with sufficient precision and speed.
Regulatory developments are also relevant. Within the EU, the Directive on preventive restructuring frameworks (Directive (EU) 2019/1023, implemented across Member States with varying degrees of creditor-friendliness) has expanded the tools available to debtors seeking to restructure before formal insolvency. This means that a creditor dealing with a financially stressed EU counterpart may now face a moratorium on enforcement as part of a preventive restructuring process, even before a formal insolvency filing. Understanding the conditions under which such moratoria arise, and the protections that remain available to dissenting creditors, has become a standard element of cross-border credit risk assessment.
For creditors operating across multiple legal systems, the consistent theme is that information asymmetry and procedural delay are the primary destroyers of recovery value. Both are reducible through timely legal engagement, proper structuring of credit relationships and a clear understanding of the enforcement toolkit available in each relevant jurisdiction.
Ferraz & Whitmore advises creditors and investors on debt recovery strategies across multiple jurisdictions. If you would like to discuss how the current insolvency environment affects a specific receivable or credit portfolio, please reach out to us at info@ferrazwhitmore.com or through our contacts page.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.