Warning – Zombie Companies May Be Shredding Your Life Savings
A Zombie company can be synonymous with any sort of business entity that has not been properly financed in the eyes of the lending institution. For instance, if an organization took on substantial debts but later saw little interest in servicing those debts, then perhaps the debt repayments may become untenable, forcing the organization to go completely bankrupt. In this theory, a zombie company would be a viable enterprise that is essentially bankrupt. In some cases, a zombie company could be a collection agency that does nothing more than purchasing the assets of dead businesses. In other cases, the concept of a zombie company can refer to a company that has gone out of business and has not been purchased by anyone. Regardless of the original intention, a zombie company represents dead cash that cannot be turned into live cash.
The existence of zombie banks and dead companies provides a ready market for fraudulent lenders who are willing to risk relatively low investment, instead of higher interest rates. In the zombie industry, dead companies are willing to absorb whatever losses a lending institution decides to impose in order to stay solvent. Because these loans are essentially interest-free, the lenders can easily inflate credit limits in order to offer greater credit amounts. In addition, zombie banks frequently lack the capital to even service the loans, creating further opportunities for the fraudulent lender to extract more money from the client than the lending institution can reasonably grant.
As it stands, zombie banks and businesses are offering credit to people who have no way of fulfilling the commitments due. These people will have little difficulty getting payday loans or personal loans in the future, as interest rates will remain at the current lows. At the very least, they should have sufficient access to refinancing, should the need arise in the future. Unfortunately, because most people who are deep in debt have already defaulted on their loan obligations, banks do not want to take any of the risks associated with these people. As such, the only recourse they have is to relinquish the loans, which is exactly what will happen should the zombie company continue to exist.
Reasons Why Zombie Companies Are Important to Eliminate
Zombie companies are a pressing topic in the business world. They are not just zombie-like because they refuse to die, but also because their company is dead and zombie-like already. There are many reasons why zombie companies need to be eliminated for the sake of both businesses and consumers, including:
- Zombie companies are a burden on future investments that can potentially lead to other zombie companies emerging from fresh investments
- Zombie companies are not able to keep up with the competition because they refuse to acknowledge their zombie-like state or engage in any new opportunities.
- A zombie company is inefficient, and thus requires more investment from a business owner than one that isn’t dead yet. This puts stress on the finances of an already struggling company by increasing debt costs as well as upkeep expenses for those who have invested in zombie companies before realizing they were actually zombies themselves.
- Zombie companies earn just enough money to continue operating and service debt but are unable to pay off their debt.
Unfortunately, there is another potential pitfall to this consolidation process. Many people fail to realize that they are actually living dead accounts, rather than officially being declared bankrupt. The purpose of the central bank’s central bank is to keep the economy functioning smoothly. If the central bank decides that the economy requires corrective measures, you could end up officially being declared insolvent, which would require you to liquidate all of your assets and most of your savings.
Because many people are not familiar with the changes that occurred to the bankruptcy code in 2021, they often think that being declared officially bankrupt means that you are immediately terminated from all employment. In reality, most bankruptcy laws have a catch-22 built into them, which means that most employees are still legally obligated to remain with the employer until the re-employment period has begun. Because of this loophole, many zombie companies try to lay off employees in order to avoid paying the re-employment fees, which can run into thousands of dollars. This is why it is important to hire a professional bankruptcy lawyer to help you with the entire process. Because bankruptcy laws were amended in 2021, you will want to make sure that you are completely represented.
A Zombie company can be synonymous with any sort of business entity that has not been properly financed in the eyes of the lending institution. For instance, if an organization took on substantial debts but later saw little interest in servicing those debts, then perhaps the debt repayments may become untenable, forcing the organization to…