Article
Debt, Decline and Survival: An Analytical Framework for Identifying and Revitalizing Zombie Firms
This study examines the prevalence, survival and resolution of zombie firms in India over the financial years 2020–2024. A purposive sample of 13 large listed companies from the aviation, telecommunications, infrastructure, textiles, metals, and power sectors was analysed. Zombie firms are defined here as mature companies that have been unable to cover their interest expenses with operating profits for three or more consecutive years, yet continue to operate because of repeated bank credit support. Secondary data of selected firms have been collected from Financial Stability Reports of 2020 to 2024 issued by RBI and IBBI and classified into three categories: Recovery, still zombie and Insolvent/ liquidated. The findings suggests that possible pathways to come out of zombie status as per IBC resolution is to transfer the control or the ownership of the firm or a strategic acquisition with healthier entities. The firms that didn’t follow the resolution of IBC still remained in zombie status and eventually moved to liquidation. These findings provide evidence on the nature of corporate distress in India in the post pandemic era and the need for stronger structural reforms to facilitate timely market-driven escape from the zombie status.