As global economic instability continues, it is no surprise that EU statistical agency Eurostat has reported corporate failures rising by 5.7% year on year in the second quarter of 2026. Failures were especially common in education and social activities (up 21.1%), transport (up 11.4%) and financial services (up 6.8%), although there were year-on-year declines in the accommodation and food services (down 2.6%), construction (down 1.7%) and trade (down 1.2%) sectors.
These assessments are in line with forecasts from major accounting networks, for whom insolvencies are an important revenue generator.
EU insolvency directive is reinforcing a shift to proactive advisory
A European restructuring survey released in June 2026 by EY-Parthenon, EY’s management consultancy wing, says that corporate stress risk has grown through the Iran war. It reports greater ‘uncertainty, supply-side disruption and energy cost pressures, with a risk of second-round effects on inflation, interest rates and growth’. An increase in restructuring activity during the second half of 2025 had been reported by 60% of respondents, and 73% were expecting a further increase in the first half of 2026.
In Germany, Europe’s largest economy, PwC data indicated a continued growth in corporate insolvencies during 2025, with German credit agency Creditreform’s analysis revealing a decade-high 23,900 insolvencies across various company sizes, up 8.3% year on year.
Shift to advisory
This shift comes as the EU has been reforming its insolvency legislation. The EU’s March 2026 insolvency harmonisation directive is also prompting more insolvency work for accountants, with directors needing, for example, to request insolvency proceedings within three months of becoming aware the company is insolvent.
Member states have until January 2029 to transpose the new law. However, Tom Murray, managing partner and head of insolvency at Dublin-based corporate finance, insolvency and forensic accounting firm Friel Stafford, emphasises that the directive – which is now in force – means that ‘accountants will need to flag insolvency risk faster and more formally, and be ready to support prepack processes’, such as enabling the sale of struggling companies to be negotiated before formal proceedings. This is ‘reinforcing the shift towards proactive, advisory-led practice’, he says.
‘We can no longer afford to diagnose distress only after crisis hits’
Murray adds that in Ireland, a key EU financial centre, retail insolvencies went up by 35% year on year and court liquidations by 69% in the first half of 2026. ‘The profession can no longer afford to diagnose distress only after the crisis hits,’ he told AB. ‘It needs to act as an early warning system.’
This is particularly true as rescue processes are underused in Ireland, he says. Only 27 examinerships and Scarps (small company administrative rescue processes) were recorded against 444 insolvencies in the first half of 2026. This is mainly because compliance accountants spot distress too late to refer to rescue processes, Murray says. ‘Building insolvency capability directly into audit and compliance teams closes that gap, allowing earlier intervention and stronger client relationships through a crisis,’ he adds.
He argues that the message is getting through, though. ‘We are definitely seeing distressed businesses investing more in accountancy services to avoid bankruptcy. We see more directors seeking advice at the “amber flag” stage rather than waiting for a winding-up petition. Enquiries around informal restructuring, cost restructuring and Scarp have all increased,’ reflecting ‘growing director awareness that early professional advice materially improves the odds of rescue’. This, he says, ‘reinforces why proactive engagement, not reactive compliance, is becoming the value proposition SMEs actually want from their accountants’.
Retreat from compliance
Hours are accordingly starting to shift away from compliance-only work to turnaround diagnostics, cashflow forecasting and interim CFO support, he says, stressing clients will pay a premium for such services ‘when survival is at stake’.
Martins Zutis, partner at Riga-based practice Moore Vilson, says insolvency practitioners in Latvia are rarely found in accountancy firms. While most accountants are focused on compliance work, he adds, they are still important in dealing with insolvency in the country as ‘they process data, and accurate books and records determine how quickly and fairly a subsequent process can run’.
‘Judgment, forecasting and crisis navigation cannot be automated’
He stresses: ‘Creditor ranking, avoidance actions, asset training and any restructuring plan all depend on the underlying financial record being reliable. Where there has been weak or opaque accounting, insolvency processes take longer, cost more and recover less for creditors.’
Strategic role
Accountants becoming strategic advisers ‘is the clearest trend in the profession today’, according to Murray. ‘Compliance work is increasingly commoditised and automated, while judgment, forecasting and crisis navigation cannot be. Firms repositioning their accountants as forward-looking strategic advisers, not just historical reporters, are the ones capturing the value and building the deepest client relationships.’
The benefits of integration include ‘more harmonised data processing and analysis to deliver insolvency advice faster and better aligned with the specific client situation’, Zutis explains. And while business managers and owners may not want to admit the prospect of bankruptcy, ‘banks and other creditors or external investors often become alarmed and force companies to hire accountants … to work out how to save their investments and the company in question’.
‘Restructuring and insolvency are problems AI can’t solve on its own’
Human-friendly
The rise of artificial intelligence, which places ‘significant price reduction pressure on revenue generated by simple data processing and reporting’, has also spurred accountants to move towards insolvency work, Zutis says. ‘Accountants need to transform into design, implement and control roles for financial processes, and into strategic advisory roles to assist clients in interpreting results, planning future action and making investment decisions.’
He argues: ‘Restructuring and insolvency situations are actually where this shift is most visible, because they’re exactly the kind of problem AI can’t solve on its own.’ Human expertise is essential to ensure the most optimised solutions. ‘A distressed business does not need faster reporting, it needs someone to look at the numbers, understand what they mean for that company and its owners, and help decide what to do next.’ Examples include renegotiating with creditors, restructuring the balance sheet ‘or in some cases winding down in an orderly way’.
