Ernst & Young:  Zombie Companies are going down


Source: Sayime BAŞÇI,

Corporations are experiencing great difficulties in debt payments due to the Covid-19 epidemic. Ernst & Young  stated,  that the companies that financially deteriorated will soon go bankrupt.

While the economic damages of the pandemic are increasing day by day, most companies in Turkey are fighting for their existence because of their debt burdens.  Total credit to corporations rose by 38% YTD.  Those firms which accrued high debts during the pandemic are struggling severely on loan payments, therefore a new bankruptcy wave is expected to hit soon in the upcoming period.

Ernst & Young Turkey President Metin Canoğulları states that bankruptcies will occur during this period considering that even the top-level management In Turkey does not know how to hedge the risks emanating from volatile exchange and interest rates.

Canoğulları said, “Indebtedness was already reaching a critical point for most companies before the pandemic. Considering Turkey’s Covid-19  outbreak is getting out of control and lockdowns are starting for a second time,  zombie companies will be out of the picture soon, and that’s how it should be. Companies which can’t manage their operation and financial risks properly should be eliminated, for the sake of the competitiveness of markets.”

Stating that banks will be rolling their sleeves for debt restructurings, interest rate reductions and principal payment  waivers Canoğulları added, “The limits of Turkish economy are obvious. Turkey is having trouble repaying its debts when the loan is in foreign exchange, therefore the economy has experienced a great distress in the past 10-15 years. Therefore, either banks or the state will cause zombie companies go bankrupt. It is just a matter of time.”


Translation Cem Cetinguc


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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and and has contributed to the financial daily Referans and the liberal daily Radikal.