Recovery signals end to bank lenience to companies surviving on debt

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Experts are warning that the end could be nigh for ‘zombie' companies, which are kept alive by lenient creditors but are too weak to invest or expand.

As the recovery gathers pace, creditors are getting tough with businesses that owe money because their assets are more valuable, according to the Mail on Sunday. Zombie companies are defined as those that can afford to pay only the interest on their debt. The rate of insolvencies rose by nearly 9% in the second quarter of 2013, from 4,554 in the first three months of this year. The number of winding-up petitions issued by creditors against firms was 39% higher at the end of June than at the end of last year. Steven Law, a partner at accountant Baker Tilly, said: ‘Since 2008-200...

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