Zombies need not be Zombies
Much publicity has been given to so-called zombie companies; companies in ‘suspended animation’¾struggling to stay alive in a difficult market place, over leveraged, with limited liquidity and with no¾access to finance, their existence dependent on continuing low interest rates and compliant bankers and creditors…..
15 April, 2013
Much publicity has been given to so-called zombie companies; companies in ‘suspended animation’¾struggling to stay alive in a difficult market place, over leveraged, with limited liquidity and with no¾access to finance, their existence dependent on continuing low interest rates and compliant bankers and creditors. There has been reluctance by banks and other creditors to trigger an insolvency event mindful of having to record a loss in what is increasingly recognised as a value destructive process.
Having cut overheads to the bone and without the cash flow to fund investment in products, new¾markets, or more efficient processes, the zombies are losing competitive ground and increasingly exposed¾to a loss of a significant customer or an increase in interest rates. Having spent months in survival mode¾management have been detracted from positioning for growth and shorn of the resources to fund it.
They are often in denial. Their companies are living on borrowed time and surviving on creditors forbearance.
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