Definition of zombie company

A company that is kept alive by lenient creditors and low interest rates even though it is too weak to invest or expand.

 

zombie companies in the news

In January 2013 UK entertainment retailer, HMV, called in administrators putting the jobs of its 4,000 employees at risk. The crisis at HMV came hot on the heels of trouble for other British high street retailers – Comet, Jessops, JJB, Clinton and Game – which had resulted in 15,000 redundancies in the preceding months. But some economists took the view that too few companies were going bust in Britain and these weak, "zombie companies" were holding back the UK's economic recovery. Bank of England data made available towards the end of 2012 appeared to support those economists' theory – about 30 per cent of British companies were lossmaking in 2010, a bigger proportion than in the 1990s recession, but corporate insolvency rates were lower.

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