Home > Uncategorized > “Zombie” companies. What a nonsense

“Zombie” companies. What a nonsense

342035-zombies-revolt-of-the-zombies-poster copyA couple of years ago I posted in response to R3’s assertion that there were simply too many “zombie companies” trading in the uk. These were businesses that were simply paying interest on financing and not paying down the debt. The prevailing view was that these businesses should fail and presumably restructure. I could not agree with this argument

Every business is liable to have difficult times but why should the immediate reaction be a dive into insolvency? So what if a business is managing to service it debts with the possible prospect of better times around the corner? Why the impulse to ditch the creditors and thus cause more difficulties in the wider market with a prevalence of bad debts

R3 are the insolvency body and they are naturally representing their interests but it was I felt a viewpoint given more credibility than it deserved

So they may have had mixed feelings about reporting the following

According to R3, the number of businesses in this position has fallen to 69,000 from 154,000 in August 2014 – the lowest level since the survey began in June 2012 – while fewer businesses have needed to negotiate payment terms with creditors.

 

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