Number of 'zombie' companies rising rapidly: Most prevalent in the textile sector

Companies that take on large amounts of debt to maintain their operations and are forced to borrow again just to pay off those debts are referred to as "zombie companies."

In Turkey, zombie companies are most prevalent in the textile sector at 25%, followed by construction at 20%, and logistics at 15-20%.

'NUMBER OF SURVIVING ZOMBIE COMPANIES IS INCREASING'

Speaking to Capital magazine, Startupfon Co-founder Gülsüm Çıracı stated that the number of zombie companies is steadily rising, saying, "Last year, the number of companies that went bankrupt or closed down in Turkey's start-up ecosystem increased significantly. This year, we are seeing an increase in zombie companies that cannot pay their debts and are only surviving through external financial support."

Economic uncertainty and high inflation are cited as the most significant reasons for the failure of start-ups. This situation increases costs for ventures while also creating operational difficulties. 

KPMG Turkey Industrial Manufacturing Sector Leader and Partner Murat Paloğlu also noted that with the reduction of state support in Turkey, 'zombie companies' are finding it difficult to access financing, adding, "In this process, some companies have opted for restructuring, while we will witness the failure of others."

News Source: 12punto