Japanese Corporate Failures Up

TOKYO (Kyodo) - The number of corporate bankruptcies in Japan increased 6.4 percent in the January-June period from a year earlier to 7,056, exceeding the 7,000 mark for the first half of a year for the first time in three years, a private research institute said Wednesday.

 

According to data released by Tokyo Shoko Research, debts left by the failed companies declined 9.3 percent to 2.65 trillion yen, the lowest figure since 1991 for the period.

 

The number of failures has remained at a relatively low level as a whole, reflecting the nation's economic recovery and public financial support for small and mid-sized companies, the agency said, adding that the number of large-scale bankruptcies with debts of at least 10 billion yen showed a substantial decline of 33.3 percent.

 

But the agency warned of an increasing number of bankruptcies at small companies with less than five employees, as such bankruptcies accounted for about 60 percent of overall corporate failures.

 

''Rises in raw material prices prompted by the yen's depreciation and higher crude oil prices are a blow to small and medium-sized companies,'' Tokyo Shoko Research said. ''Bankruptcies are likely to keep increasing among small companies.''

 

The data cover bankrupt companies with debts of 10 million yen or more.

 

The number of bankruptcies increased in seven out of 10 industrial sectors monitored—the information telecommunication, service, wholesale, manufacturing, retailing and construction sectors, as well as the farm, forestry, fishery and mining sector.

 

In contrast, bankruptcies declined in three sectors—the financial and insurance, real estate and transport industries.

 

By region, the number of bankruptcies increased in eight regions out of nine, showing that corporate failures were widespread almost across the nation.

 

According to a report released the same day by another private research firm, Teikoku Databank, the number of corporate bankruptcies came to 5,394 in the January-June period, up 16.6 percent from a year earlier, leaving debts of 2.57 trillion yen, down 8.3 percent.

 

The report covers failures that were filed with courts only and involved debts of 10 million yen or more.

 

For June alone, bankruptcies numbered 1,185, up 6.7 percent from a year earlier for the third consecutive month of increases, leaving debts of 315.25 billion yen, down 17.28 percent, Tokyo Shoko Research said.

 

According to Teikoku Databank, the number of business failures rose 32.4 percent to 985 in June, leaving debts of 336.43 billion yen, down 12.2 percent.