Zombies stalk the North East

Gareth Self: Zombie warning
Gareth Self: Zombie warning
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Yorkshire, the Humber and the North East is now home to 16,000 ‘zombie’ businesses, according to research by insolvency trade body R3.

Zombie companies are businesses that can pay the interest on their debts but cannot clear the debts themselves.

Gareth Self, an insolvency practitioner with the P&A Group in Sheffield and a member of R3’s Yorkshire committee, said: “We know that banks are displaying greater forbearance on existing debt, but when a business cannot get extra lending it will be unable to expand.

“Others would argue that this stagnation ties up capital that could be used for other, healthier businesses.

“Corporate insolvencies have traditionally tended to spike in early recovery, but so far this recession is rewriting the rules.

“This surely reflects this longer period of low growth that is the new norm, with low interest rates and low liquidation rates, but many businesses running at a loss.”