“Zombie” salons head for administration

According to the findings by CreditorWatch, a number so-called “zombie businesses” that have been keeping their head above water through government support, are choosing to shut up shop for good, before the support runs out.

The survey showed a 23.8 per cent increase in business administrations in Victoria last month, while Queensland recorded a 24.1 per cent increase. New South Wales saw a 1.6 per cent decrease.

“Seeing businesses enter into administration is never something you want to celebrate. However, September’s increase in default and administration rates does indicate that some businesses which have been reliant on government support are starting to accept the reality of their situation and are taking steps to settle with their creditors,” CreditorWatch CEO, Patrick Coghlan, said. “What we don’t want to see is businesses that are doomed to fail continuing to operate and taking healthy companies down with them. The long term-trend is that zombie companies will continue to survive on government support and so the next six months are crucial in determining what position we start our economic recovery from.”

However, with Victoria looking to emerge from their enduring lockdown, business analyst Trudy Dempster says there is still hope for many salons. “What we saw in Sydney was that when salons were able to re-open, they were booked out for weeks in advance. If salons in Victoria can hold out, there may well be brighter days coming.”

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