Struggling Northern businesses are ‘zombies’ for longer
‘Zombie businesses’ are in the banks’ ‘intensive care’ units for twice as long as two years ago, and are at serious risk from any interest rate rise according to a KPMG survey of 400 bankers across the region.
Zombie companies are those that are just surviving but have little room for manoeuvre in the event of any further downturn or any one off cash issues.
They typically have significant levels of debt and though able to cover their current interest payments, are likely to struggle to repay the capital.
Mark Firmin, KPMG’s northern head of restructuring, said: “There has undoubtedly been an increase in the number of Northern businesses that are in a zombie state, with the scale of the problem growing year on year, in parallel with the economy’s failure to grow.”
“It’s a serious issue as it means our regional marketplace is increasingly vulnerable given it takes only one bump in the road for these companies to be knocked over.”
Businesses tend to be involved with a bank’s business support team (‘intensive care’) until their situation improves.
Eighty percent of the region’s banks believe the biggest threat to the corporate zombies is a rise in interest rates.
This was posted in Bdaily's Members' News section by Ruth Mitchell .
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