{"id":24058,"date":"2024-06-08T02:44:10","date_gmt":"2024-06-07T21:14:10","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=24058"},"modified":"2025-10-07T11:34:56","modified_gmt":"2025-10-07T06:04:56","slug":"zombie-company","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/zombie-company\/","title":{"rendered":"What is a Zombie Company?"},"content":{"rendered":"<h2>About Zombie Company:<\/h2>\n<ul>\n<li>A zombie company is a <strong>corporate entity<\/strong> with very <strong>limited cash flows,<\/strong> only <strong>sufficient to pay the interest on the debt<\/strong> borrowed but <strong>not the principal amount<\/strong> of the loan.<\/li>\n<li>The <strong>revenue generated<\/strong> by the business operations <strong>only covers the fixed routine and operating costs<\/strong> (wages, rent, interest payments on debt, for example).<\/li>\n<li>These companies, often referred to as the <strong>&#8220;living dead&#8221; or &#8220;zombie stocks<\/strong>,&#8221; have <strong>no excess capital to invest<\/strong> in growth, innovation, or significant improvements.<\/li>\n<li>They are <strong>highly dependent on banks for financing.<\/strong><\/li>\n<li>They are typically <strong>subject to higher borrowing costs<\/strong> and may be <strong>one just event<\/strong>\u2014market disruption or a poor quarter performance\u2014<strong>away from insolvency or a bailout<\/strong>.\u00a0<\/li>\n<li>They are \u201c<strong>uncompetitive survivors<\/strong>\u201d and contribute to <strong>lower productivity<\/strong> in the global economy.<\/li>\n<li>These companies can pose a <strong>risk to the broader economy<\/strong> by <strong>tying up resources<\/strong> that could be more effectively used by healthier, more innovative firms.<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1: What is insolvency?<\/h3>\n<p>Insolvency refers to situations where a debtor cannot pay the debts they owe. For instance, a troubled company may become insolvent when it is unable to repay its creditors money owed on time, often leading to a bankruptcy filing.<\/p>\n<p><strong>Source: <\/strong><a href=\"https:\/\/apnews.com\/article\/zombie-business-corporate-debt-investing-interest-borrowing-52bd9ebbe1dd98983d39fe7d14e3c7fd\" target=\"_blank\" rel=\"nofollow noopener\">Zombies: Ranks of world\u2019s most debt-hobbled companies are soaring, and not all will survive<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>A zombie company is a corporate entity with very limited cash flows, only sufficient to pay the interest on the debt borrowed but not the principal amount of the loan.<\/p>\n","protected":false},"author":5,"featured_media":24059,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-24058","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/24058","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=24058"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/24058\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/24059"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=24058"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=24058"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=24058"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}