Drop in the number of ‘zombie’ businesses

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The number of “zombie businesses” in the North has fallen to under 3,000 from a peak of 24,500 in November 2012, says an insolvency trade body.

The figures show that “zombie companies” – those only able to pay the interest on their debts – now account for fewer than one per cent of the region’s businesses, down from nine per cent in 2012.

Jeremy Oddie, North West chair of R3 and also head of recoveries at accountants Mitchell Charlesworth, said: “Many struggling businesses will have used the unexpected period of grace between recession and recovery to put their house in order,allowing them to spring ‘back to life’.

“However, our research also shows thousands of businesses moving beyond ‘struggling but surviving’ into potentially dangerous territory.”

The research shows 12 per cent of companies are having to negotiate with creditors – up from three per cent in 2012 and equivalent to 40,000 businesses. Meanwhile, one per cent said they would be unable to pay their debts if interest rates rose.

Jeremy adds: “Whereas ‘zombie businesses’ can keep going for the time being, businesses in this situation are approaching crunch time.”