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WHAT IS A ZOMBIE COMPANY?
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In political economy, a zombie company is a company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal.
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Is Netflix a zombie company?
Netflix now the home of famous Zombie series “Kingdom” and “the Walking Dead” but much like its favourite series, Netflix is a zombie company and I don't mean because of Kingdom, The Walking Dead, Z Nation, iZombie, Santa Clarita Diet, Dead Set, Containment, & Helix their top ten zombies highlighted for this Halloween.Oct 31, 2019
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How many zombie companies are there?
Nearly one in every five publicly traded U.S. companies is a zombie, according to data compiled by Deutsche Bank Securities. That figure has doubled since 2013 and is up dramatically from the late 1990s, when there were almost no half-dead companies staggering across the landscape.Jun 23, 2020
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Is GE a zombie company?
Zombie firm spotlight: General Electric (NYSE: GE)
When it comes to debt this industrial giant is a great example or a risky zombie company. General Electric has almost $41 billion in just credit lines and looking at its performance it is no wonder the stock is down by more than half in 2018.Dec 27, 2018
When it comes to debt this industrial giant is a great example or a risky zombie company. General Electric has almost $41 billion in just credit lines and looking at its performance it is no wonder the stock is down by more than half in 2018.Dec 27, 2018
Search for: Is GE a zombie company?
What companies are highly leveraged?
Zombie company
From Wikipedia, the free encyclopedia
In political economy, a zombie company is a company that needs bailouts in order to operate, or an indebted company that is able to repay the interest on its debts but not repay the principal.
Description[edit]
Zombie companies are indebted businesses that, although generating cash, after covering running costs, fixed costs (wages, rates, rent) they only have enough funds to service the interest on their loans, but not the debt itself.[1] As such they generally depend on banks (creditors) for their continued existence, effectively putting them on never-ending life support.
History[edit]
The term "zombie company" was applied to Japanese firms supported by Japanese banks during the period known as the "Lost Decade" after the collapse of the Japanese asset price bubble in c.1990. Japanese banks continued to support weak or failing firms.[2] The retailer Daiei is an example of a large company that expanded greatly during the period leading to the 1990 crash, and under different circumstances would have been expected to have entered receivership or bankruptcy. The finance minister Takeo Hiranuma was reported as describing the 96,000 employee firm as being 'too big to fail'.[2][3]
The term regained popularity in the media during 2008 for companies receiving bailouts from the U.S. Troubled Asset Relief Program (TARP).[citation needed]
By 2016 following economic downturn in China (see also 2015–16 Chinese stock market crash), Chinese industrial companies (steel, aluminium, paper, etc.) had developed gross overproduction capacity problems, with overcapacity rising from 0% in 2007 to an average of 13% by 2015, with figures higher than 30% in some industries (cement, steel in 2014).[4] At the 2016 National People's Congress the country's government recognised the issue of the 'Zombie Enterprises' and announced that it was to close or reorganise many state owned (public) industrial companies by 2020.[5][6] In coal and steel industries resultant loss of work was expected to result in 1.8 million redundancies (15% of workforce), with total redundancies estimated to be up to 6 million workers.[7]
Zombie companies are those that remain in business but are so deeply in debt that they’ll never catch up. In an age where U.S. monetary policy seems to ease by the day, enterprises of all sizes are tapping time and again into debt markets — potentially creating a corporate landscape littered with zombie firms.[8]
See also[edit]
- Zombie bank, related term referring to bank businesses with similar financial issues
- Lemon socialism, term referring to state support of weak or failing businesses
- Crony capitalism
- Too big to fail
- Vulture fund
- Corporate debt bubble
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