A Zombie Company is defined as a company that is no longer able to service its debt obligations, yet continues to operate. This can happen for a variety of reasons, such as poor management, an industry downturn, or simply bad luck. Zombie Companies often have negative equity, meaning that their liabilities exceed their assets.
In many cases, Zombie Companies are kept afloat by their creditors, who are reluctant to push them into bankruptcy because they fear they will not recover the full amount owed.