Partly Cloudy

Partly Cloudy

max temp: 13°C

min temp: 8°C


East Anglia: Insolvency body R3 warns of renewed increase in the number of ‘zombie’ firms

13:13 07 January 2014

Shay Lettice of Peters Elworthy & Moore, east region chairman of R3

Shay Lettice of Peters Elworthy & Moore, east region chairman of R3

Roger Adams Photographer 2011

The number of “zombie” businesses those only able to pay the interest on their debts – has risen sharply in the East of England over the past six months despite the upturn in the economy, according to a report by insolvency trade body R3.

The total of around 23,000 businesses in the region which are keeping up with interest payments but unable to reduce the amount they owe remains well down on the figure of 55,000 recorded 18 months ago but is now around double the level in R3’s last survey in the middle of 2013.

The research also shows a six month rise from 5,000 to 15,000 in the number of businesses in the region saying they were negotiating payment terms with creditors, although again this represents a decrease of 11,000 compared with 18 months ago.

Meanwhile, the number of local businesses in the region reporting that they would be unable to keep up with their debts if interest rates were to increase now stands at around 20,000.

R3 eastern region chairman Shay Lettice said zombie businesses were the chief beneficiaries of the “relatively benign” trading environment of recent years, characterised by low interest rates and forbearance on the part of many lenders, which had resulted in a smaller number of corporate insolvencies compared with previous recessions.

“Although the number of businesses showing ‘zombie’ characteristics has fallen in the long-term, there hasn’t been a corresponding rise in corporate insolvencies, which is encouraging,” he said.

“Many businesses that were struggling 18 months ago will have used the unexpected grace period between recession and recovery to put their house in order, allowing them to spring back to life.”

However, Mr Lettice, a partner at Cambridge accountancy firm Peters Elworthy & Moore, said that Zombie businesses which did not manage to recover their footing were bound to fail at some point, perhaps as their reserves became depleted or as their creditors ran out of patience.

Another possible factor behind the recent increase in zombie businesses was the adoption by HM Revenue & Customs of a “real time” approach to gathering information, which could also be putting more pressure on some firms.

“The increase in organisations having to negotiate payment terms with creditors, combined with the relatively large number worried about struggling should interest rates rise, indicates that some businesses are now moving beyond ‘struggling but surviving’ into potentially dangerous territory,” added Mr Lettice.

“It’s a positive that businesses are taking action and addressing their problems by talking to their creditors and this could help stave off a future spike in corporate insolvencies.

“We could, however, see a prolonged period in which the number of corporate failures is higher than might be expected so long after a recession.”


An Ipswich man has been charged with being in possession of a flare during the derby game with Norwich at Portman Road in August.

A video of the last ever sighting of Corrie McKeague has been released, as four weeks pass with no new leads.

British Gas has been forced to backtrack after repeatedly billing a 91-year-old great-grandmother for hundreds of pounds more than she owed.

Specialist RAF search officers are joining the hunt today for missing airman Corrie McKeague.

At last! Ipswich Town have scored some goals – and after 10 months Freddie Sears even managed to grab one as well, much to the delight of himself and his teammates.

A dangerous driver involved in a four-and-a-half mile police chase around Ipswich while drunk and disqualified from driving is facing a possible jail term.

A Kesgrave man accused of attempting to rape a schoolgirl has been cleared by a jury.

Remains of a ship that sank to the seabed off the Suffolk coast around 500 years ago have been categorised as being “at risk” in an updated list of the nation’s heritage treasures published today.

One of the last few veterans of the ill-fated Arnhem campaign in 1944 has died after a short illness at the age of 96.

A four-month-old baby was snatched from his mother’s arms by the family dog and mauled to death, an inquest has heard.

Most read

Most commented


Show Job Lists

Topic pages


Newsletter Sign Up

MyDate24 MyPhotos24