Tightening trade restrictions and concerns swirling around intellectual property rights are creating new risks for conglomerates faced with financial stress, especially when it comes to selling their assets.

When conglomerates encounter financial difficulties, they often sell assets to raise cash and pay off debts. But governments in the United States and elsewhere have begun to increase scrutiny of sales of assets to foreign entities buyers. Many governments have the power to restrict certain sales of assets on the basis of national interest concerns.

In recent years, the U.S. government has applied heightened scrutiny to transactions with foreign buyers. A key vehicle for that scrutiny has been the Committee on Foreign Investment in the United States (CFIUS), a 44-year-old governmental body that most Americans had never heard of until recent years. CFIUS's mandate is to determine the effect foreign investments might have on the country’s national security. That mandate was broadly expanded last year, with passage of the Foreign Investment Risk Review Modernization Act, which expanded CFIUS’s power to review and block foreign-direct investment.

And in Europe, the European Union and several European countries recently have made efforts to push distressed organizations toward reorganizations rather than liquidations. The European Union's Preventive Restructuring Frameworks Directive provides companies more restructuring powers.

The bottom line: As governments become more involved in cross-border transactions, leaders of distressed companies and their advisors must be aware that they are not operating in an entirely free market. Multinational conglomerates have to be ready to adapt and adjust their strategies in the investment and asset sales contexts.