2 Jan 2014 10:13am

Zombie companies on the wane

The number of zombie companies in the UK has decreased

A total of 103,000 UK businesses were classed as zombies in November, down by more than a third from the peak of 160,000 in November 2012, according to figures from insolvency body R3.

This represents about 6% of companies with a turnover of at least £50,000.

R3 says its research suggests that some companies may have been able to work their way out of their difficulties and back to health.

About 96,000 companies told R3 that they would not be able to repay debts if interest rates rose. That is slightly up on November 2012 but well off the peak of 145,000 in June last year.

In November, 166,000 companies were negotiating terms with their lenders compared with 75,000 the year before. R3 says that may mean a number of companies have moved a step further towards insolvency

“Thousands of businesses are moving beyond ‘struggling but surviving’ into potentially dangerous territory. It’s a positive that businesses are taking action and addressing their problems by talking to their creditors. But, unfortunately, successfully negotiating new payment terms that work for both the creditor and debtor isn’t always possible,” said R3 president Liz Bingham.

“Corporate insolvencies have always jumped up after recessions, but a stuttering recovery, government support schemes, creditor forbearance, and low interest rates have kept thousands of otherwise unviable businesses going this time around.

“A genuine ‘spike’ in insolvencies may now be unlikely, but there could well be a prolonged period where corporate insolvency numbers are higher than where they might typically be,” added Bingham.

R3 surveyed 500 business owners or FDs of businesses with a turnover of £50,000 or more.

Raymond Doherty


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