Zombie companies on the cliff-edge
29 July 2020: It is reported that the £160bn support package provided by the Government since lockdown has kept companies afloat that would have otherwise perished since March 2020. These Zombie companies cannot pay off the full debt they owe or find cash to invest and grow.
A number of other firms that were not in this Zombie category and could have been successful have piled on the debts and will consequently struggle to survive over autumn.
The government said it would “adjust support” as the economy reopens. However, once loans have been exhausted and tax deferrals become due it will become inevitable for Zombie companies to accept their fate.
As a firm, BRI Business Recovery and Insolvency can support claims that there was a surge in insolvencies in the first quarter of this year and since lockdown.
Once the government had introduced support packages to ride out the storm, directors continued to put off the inevitable which resulted in a decrease in insolvency appointments between April and June 2020. It is reported that the rate of insolvencies slowed in the second quarter, with a further 5,000 businesses insolvent – a drop of 23% compared to the same period last year.
We will continue to work hard with businesses to see if there is a means and opportunity of survival and provide a high level of professional service.
Please contact any one of the BRI Business Recovery and Insolvency management team to discuss the options available.