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ARTICLE · 19 SEPTEMBER 2013

The Zombies Are Coming!

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The press has been full of commentary on the prevalence of "Zombie" companies.

United KingdomInsolvency/Bankruptcy/Re-Structuring
Edward Starling
Edward Starling

The press has been full of commentary on the prevalence of "Zombie" companies. These are companies that are surviving by the skin of their teeth. They are often scraping by, just about paying their primary lender, and so have escaped an insolvency process. This is in part a result of the extremely low interest rates. Most specialists agree that when interest rates rise, so will the number of Zombie companies that finally succumb. Another factor appears to be the reluctance of the primary lenders to be seen to be the catalyst for an insolvency process for (understandable) reputational reasons, particularly in the case of the government owned banks.

Traditionally there is an increase in insolvency processes after a recession has finished and when the economy has started to grow and the Zombies' more stable competitors have strengthened and gained a competitive advantage. If the shoots of recovery are now showing then the likelihood of some Zombies finally hanging

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