The definition of zombie companies refers to companies that have stopped production, semi-stopped production, suffered losses for consecutive years, and are insolvent, and mainly rely on government subsidies and bank loan renewals to maintain operations. The reference standards for identifying "zombie enterprises" are: production and operation difficulties cause production to be suspended for more than half a year or half-suspended for more than 1 year; high asset-liability ratio and continuous losses for 3 years or more; mainly relying on government subsidies or bank loan renewal and other programs to maintain production and operations; Long-term arrears of wages, taxes, interest, and fees. Industrial enterprises of medium and above scale that meet any two or more of the above conditions are considered "zombie enterprises".

The characteristics of zombie companies are as follows:

1. The company is large in scale. Zombie companies are mostly state-owned companies with larger scales and more employees. These state-owned enterprises occupy a relatively important position in the local economy. For the sake of maintaining stability, the government neither allows them to go bankrupt nor makes them reborn. It can only maintain the status quo through continuous blood transfusions from banks or the government.

2. The industry has overcapacity. Most zombie companies are in industries such as steel, cement, and home appliances with overcapacity. These industries have blindly expanded production, resulting in overcapacity, which ultimately led to product backlogs and employee unemployment

3. Low-end industries. From an industrial perspective, zombie companies basically belong to the manufacturing sector with low product added value and small profit margins. Due to low technological content and difficulties in transformation and upgrading, these industries have heavy debt burdens and eventually become insolvent.

The symptoms of zombie companies are generally similar, but the reasons for their formation are different. It is generally believed that the internal factors such as poor management and poor decision-making of the company itself, as well as micro factors such as product structure and market competition, lead to the formation of zombie companies. The formation, further speaking, is due to the imperfection and imperfection of the market system and mechanism, which leads to the emergence of zombie enterprises.

This reflects the reasons for the formation of zombie companies from a historical perspective, but it does not reflect that changes in the economic system and changes in development methods are also important reasons for the formation of zombie companies. I believe that the formation of zombie enterprises and the prominence of the problem of zombie enterprises are closely related to the current background of my country's economic development. Specifically, the main reasons for the formation of zombie companies are as follows:

1. Due to the adjustment of the national economic structure, some companies that do not meet industry development, regional layout, and product demand have become targets for mergers, reorganizations, and liquidation and exit.

2. Economic development has entered a new normal, and some companies are unable to adapt and fall behind. Under the new normal, GDP has shifted from high-speed growth to medium-to-high-speed growth, and the economic development model has shifted from investment-driven to innovation-driven. Those companies that only rely on large amounts of capital investment to achieve scale without innovation advantages have become zombie companies.

3. Supply-side structural reform is advancing, and investment in expanding demand through stimulus policies has decreased. During the period when effective demand cannot be met and new supply has not yet been formed, the original products cannot meet the current demand, and industries such as steel, coal, cement, etc. have overcapacity, making it difficult for enterprises to operate and transform and upgrade, resulting in zombie companies.

4. The market system is imperfect and the flow of enterprises and production factors is not smooth. For example, state-owned enterprises have a large number of historical problems and imperfect modern enterprise systems, including employee status changes, social functions, and messy claims and debts; exit mechanisms such as enterprise bankruptcy and industrial and commercial cancellation are imperfect.

5. Influence of stakeholders. Managers are worried about accountability, employees are worried about losing job opportunities, banks are worried about loans becoming non-performing, customers are also worried about losses, and stakeholders are unwilling or hindering the company's exit, which promotes the formation of zombie companies.

6. Over-protection by the government. Under the original economic growth model, in order to stimulate the local economy, local governments continued to encourage companies to invest in public utilities and competitive fields. When these homogeneous investments encountered an economic downturn, they quickly became a burden for companies, and the government was motivated by local taxation. For the sake of employment and social stability, they do not want companies to go bankrupt and do not support court acceptance. They continue to use fiscal subsidy coordination and bank support and other means in the hope that risks will not be exposed in the short term. The accumulated liabilities will lead to zombie companies. "

Legal Basis

"Company Law of the People's Republic of China"

Article 185 The liquidation committee shall start from the date of establishment Creditors shall be notified within ten days and shall be announced in a newspaper within sixty days. Creditors shall declare their claims to the liquidation committee within thirty days from the date of receipt of the notice, or within forty-five days from the date of announcement if the creditors have not received the notice. Claims.

When declaring a claim, a creditor shall explain the relevant matters of the claim and provide supporting materials.

The liquidation team shall register the claims.

During the period of reporting claims, the liquidation team shall not pay off creditors.

Article 186: After clearing the company's assets and preparing a balance sheet and property list, the liquidation team shall formulate a liquidation plan and submit it to the shareholders' meeting, general meeting of shareholders or the people's court for confirmation.

The remaining property of the company after paying liquidation expenses, employee wages, social insurance fees and statutory compensation, paying taxes owed, and paying off the company's debts, shall be distributed by the limited liability company according to the proportion of the shareholders' capital contributions. , a joint-stock company distributes shares according to the proportion of shares held by shareholders.

During liquidation, the company continues to exist, but it is not allowed to carry out business activities unrelated to liquidation. The company's property shall not be distributed to shareholders before it is paid off in accordance with the provisions of the preceding paragraph.

"Enterprise Bankruptcy Law of the People's Republic of China"

Article 120 If the bankrupt has no property to distribute, the administrator shall request the people's court to rule to terminate the bankruptcy program.

After the final distribution is completed, the administrator shall promptly submit a bankruptcy property distribution report to the People's Court and request the People's Court to rule on the termination of the bankruptcy proceedings.

The people's court shall make a ruling on whether to terminate the bankruptcy proceedings within fifteen days from the date of receipt of the administrator's request to terminate the bankruptcy proceedings. If the ruling is concluded, an announcement shall be made.