Japanese Corporate Failures Rise In July

15.6 percent increase—mainly due to unsuccessful small businesses—leads to 12.8 percent increase in debts.

TOKYO (Kyodo) - The number of corporate bankruptcies in Japan rose 15.6 percent in July from a year earlier to 1,215, up for the fourth straight month mainly due to increases in small business failures, a private credit-research agency said today.
The debts left by these failures increased 12.8 percent to 349.78 billion yen (US $2.94 million), but this amount is the second-lowest figure for the month of July in the past 10 years, Tokyo Shoko Research said.
The research agency attributed the relatively small number of debts to the fact that the majority of the failures were small businesses. The number of small companies that failed with debts of 100 million yen (US $839,000) or less accounted for 64.1 percent of all the failed companies, it said.
The monthly data covers firms that went under with debts of 10 million yen (US $83,900) or more.
While Japan's corporate bankruptcies continue to drift at a low level, small companies will face tighter finances with a possible hike in interest rate, increasing labors costs and surging oil prices, the agency said.
They also may experience more funding difficulties as the government shifts toward consolidating its financing programs, it said.
Bankruptcies rose in eight of the 10 monitored industrial sectors. The eight were transportation, services, manufacturing, telecommunications, retailers, wholesalers, construction, and agriculture, forestry and fisheries.
Failures in the construction industry rose 4.7 percent to 353, remaining in the 300 level for three straight months. Bankruptcies among restaurant operators and liquor retailers marked this year's highest, with 79 restaurants and 16 liquor retailers going under, it said.
Teikoku Databank, another research agency, separately released data that showed the number of bankruptcies came to 915 in July, up 22.7 percent from a year earlier for a 10th consecutive month of increase.
More in Supply Chain