Are zombie companies facing a cliff edge on October 1st?

By Opus Restructuring & Insolvency

20 Sep 2021

imc-headshot.jpg

As the full effects of the Coronavirus pandemic began to be felt last March many anticipated a significant rise in formal insolvency appointments as companies grappled with the difficulties of a loss of revenue and a need to meet fixed costs.

The insolvency and restructuring industry braced itself for an increase in work not seen since the financial crisis in 2008. However, thanks in no small part to the Government support measures put in place, this increase has not yet materialised. In fact, 2020 saw the lowest number of insolvency appointments since 1989 and industry predictions of increased volumes have been repeatedly pushed back as the pandemic and corresponding support measures continued. To coin a phrase, it seems fair to say the Government has succeeded in ‘flattening the curve’ of financial distress.

Yet as the country continues to reopen and support measures are withdrawn it appears a spike may be just around the corner. The final elements of furlough are scheduled to be withdrawn on September 30th. The following day the ban on winding up petitions is lifted (subject to a minimum debt threshold of £10,000 and excluding commercial rent arrears) allowing creditors to pursue for payment via the courts in a much more aggressive manner. In addition, as repayments fall due on Bounce Back Loans and CBILS many struggling companies may began to find themselves squeezed by a number of factors.

The high proportion of zombie companies in the UK, those that do not record a profit or contribute meaningfully to the economy, has been widely reported to have increased during the pandemic. A report by the thinktank Onward in April 2021 estimated as many as 20% of companies meet this classification, an increase from 16% prior to the pandemic. Data taken from Company Watch shows that the position in Lancashire is stark as an estimated 10,211 companies are believed to be zombie companies. The figure in 2020 was 6,715 and the current level represents a 52% year on year increase in zombie companies. These companies may struggle to recover from this position once support measures and protection are withdrawn and a cliff edge looms large for a number of companies on October 1st.

Corporate failure isn’t however a certain consequence to these difficulties and companies in financial distress may still be able to resolve their position by taking early advice from an insolvency practitioner. Much will depend on the stance taken by HMRC and other creditors and how pragmatically they approach overdue debts. There will be a range of options available for distressed companies, but the main considerations will be the need to keep a tighter than ever rein on cashflow controls and to assess the likely market in their specific industries. If future trade is anticipated to be positive this may enable companies to reach appropriate plans to deal with their historic debt and recover from their zombie status. 

As directors if you are facing financial difficulties as support measures are withdrawn it is important to take early advice from a licensed insolvency practitioner whilst restructuring options are available. A consultation can be arranged with Ian McCulloch at Opus Restructuring & Insolvency by calling 07854 031177 or e-mailing [email protected]

Latest news

1

New India branch campus on the horizon for Lancaster University Keir Starmer meets Indian PM and included Prof Simon Guy Lancaster University. Pic Simon Dawson

New India branch campus on the horizon for Lancaster University

09 Oct 2025

2

Best events and talented students complete finalists list for Lancashire Tourism Awards 2026 Best Events and Talented students on Lancashire Tourism Awards finalist list

Best events and talented students complete finalists list for Lancashire Tourism Awards 2026

09 Oct 2025

3

East Lancashire Learning Group named UK digital transformation leader in CIO 100 Awards Andrew Dewhurst with the award win

East Lancashire Learning Group named UK digital transformation leader in CIO 100 Awards

09 Oct 2025

4

PHX Training appoints new business leader in Blackpool Jason Davenport PHX Training

PHX Training appoints new business leader in Blackpool

09 Oct 2025

5

Velocity seals Airbus extension worth up to $54m Velocity Composites Has Announced Its Entry Into The Us Market

Velocity seals Airbus extension worth up to $54m

08 Oct 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Help to grow management course
Help to grow - barriers to growth.png.png
LBV Hub Seminars
26 Sep 2025 - 16 Dec 2025

Help to grow management course

Preston Campus , Preston , PR1 2HE

09:00 - 15:00

Advantage: AI – A Workshop for Business Leaders – Oct 10th
Ai 10.10.png.png
LBV Hub Seminars
10 Oct 2025 - 10 Oct 2025

Advantage: AI – A Workshop for Business Leaders – Oct 10th

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

09:00 - 12:00

Unlocking major project opportunities in the North West
Lancs-cham-logo.jpg.jpg
LBV Hub Seminars
15 Oct 2025 - 15 Oct 2025

Unlocking major project opportunities in the North West

Strathmore Hotel, Morecambe, LA4 5AP

08:00 - 10:00

The New Employee Rights Landscape: Day One Compliance Essentials
EventBrite NORi - 15th Oct 2025 Webinar.png.png
LBV Hub Webinar
15 Oct 2025 - 15 Oct 2025

The New Employee Rights Landscape: Day One Compliance Essentials

Microsoft Teams, Microsoft Teams, PR253XH

13:30 - 15:00

The Autumn Re set - pour me a wine
LBV Advert_Autumn Reset 1200 x 630px.png.png
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

The Autumn Re set - pour me a wine

The Artistry House , Preston , PR1 3JJ

17:30 - 19:30

The Business Network Central & East Lancashire
LBV Header (26).png.png
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

The Business Network Central & East Lancashire

Stanley House, Blackburn, BB2 7NP

11:30 - 14:15

October Freelancer Meet-Up
LBV Hub Networking
16 Oct 2025 - 16 Oct 2025

October Freelancer Meet-Up

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Women scaling up Blackpool Fylde and Wyre
LBV Hub Seminars
22 Oct 2025 - 09 Jan 2026

Women scaling up Blackpool Fylde and Wyre

The Small Business Academy, Blackpool, FY4 5JX

09:30 - 15:30

HR Essentials for pubs, bars and licensed venues
EventBrite NORi - 22nd Oct Webinar.png.png
LBV Hub Webinar
22 Oct 2025 - 22 Oct 2025

HR Essentials for pubs, bars and licensed venues

Online - Teams, Leyland, PR253XH

13:30 - 15:00

RISE - Lancashire's unique leadership programme for women
thumbnail_Emma Weston Illustration WENDY BOWERS RISE Illustrstion.jpg.jpg
LBV Hub Seminars
22 Oct 2025 - 18 Mar 2026

RISE - Lancashire's unique leadership programme for women

East Lancashire Chamber of Commerce, Clayton le Moors, BB5 5JR

09:30 - 15:30

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV124 Online Graphic
Subscribe now

Weekly news bulletin