Zombies and Zombie Companies, Both Make the Blood of IPs Run Cold

Posted on Jul 17, 2023. by NTI

You can understand some people's confusion. A 'zombie' is a mythological undead corporeal revenant created through the reanimation of a corpse often recognised as a dead person brought back to life without the ability to speak or move easily.  Whereas a 'zombie company' is one that needs to be bailed out in order to operate, or an indebted company that is able to repay the interest on its debts, but not the principal.

Of course, the official line is that insolvency professionals welcome neither as both can play havoc with a family day out. However, an increase of the latter will historically signify a potential increase in business. When booking seven new team members on our ITIQ introduction and induction courses, one of NTI's clients last week told us that they regularly get three, maybe four, new CVLs a week. Last Tuesday 19 CVLs staggered through the door, closely followed by 14 on Wednesday and 11 on Friday. Their knackered corporate team now resembles the former category of 'zombies'.

Last Tuesday (11 July) the NTI newsroom ran an item quoting Ric Traynor of Begbies that forewarned of a big future increase of insolvencies of larger companies whose finger nails have become exhausted from holding too long onto the edge of various cliffs. Today The Times ran a story based on research by Kroll quoting that Administrations have increased by 44 per cent in the first six months of the year, cases rising from 429 to 618 as inflation put pressure on balance sheets. Between January and June fifty-six businesses filed for protection from creditors, compared with 53 during 2022. The construction and manufacturing industries suffered the most acute distress overall as they were hit with 79 and 71 Administrations respectively.

An unnamed Insolvency Practitioner (that would be the snitch, Mandy Wareham from Bolton) told newspaper sources that Britain’s debt-laden zombie companies are expected to be wiped out by the surge in interest rates. Tufnells the delivery company won't be paying the £10.5 million it owes to HMRC and today it was the turn of Lotus Cars to announce that pre-tax losses rose to £141.1 million, following a slump in the number of cars it could deliver. A spokesperson says this is the fault of supply chain issues, whereas most bosses point a rotting finger at interest rates and fuel bills.

The sectors under the greatest challenge continue to be construction, manufacturing, leisure and hospitality, but most of the others are only resting exhausted in their shadows. The result is that corporate insolvencies in England and Wales have hit a 24-year high ...

... but the owners of insolvency and restructuring businesses cannot get hold of a new Lotus for love nor money.

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