Corporate failures off 5% in July to 1,026 firms

Kyodo

The number of corporate bankruptcies last month declined 5.0 percent from a year earlier to 1,026, a credit research agency said Wednesday.

But liabilities left by the business failures more than tripled to ¥724.1 billion — the highest monthly figure so far this year — due largely to the sizable debts left behind by Sanko Steamship Co. and consumer credit firm Clavis Co., according to Tokyo Shoko Research.

Amid vigorous reconstruction efforts, the number of corporate failures in Tohoku, the region hit hardest by the March 11 disasters and nuclear crisis, dropped for the 19th month in a row.

Of the nine regions surveyed by the agency, business failures in four regions in central and western Japan went up.

Of the 10 industries polled, bankruptcies increased in six sectors, including the wholesale, transport and real estate sectors.

JAL rehab spurs study

Jiji

The transport minister will consider guidelines for state support and corporate rehabilitation in the airline industry, following criticism over the quick turnaround of Japan Airlines Corp. via taxpayer money.

At a Lower House committee meeting Tuesday, transport minister Yuichiro Hata said plans are afoot to have an advisory panel review the entire process of JAL’s rehabilitation with state funds, from the time it sought bankruptcy protection to its swift recovery.

The ministry will consult at a later stage with the Fair Trade Commission and other pertinent government agencies over the envisioned guidelines, Hata said.

The Liberal Democratic Party, the main opposition force, has called for guidelines to ensure fair competition in the industry due to the speed of JAL’s rebound. The carrier is set to be relisted on the Tokyo Stock Exchange in September.

JAL’s investments and expansion of air routes also will be monitored by the ministry over a set period of time to ensure the bailout has not given the airline an unfair advantage in the market, he said.

Hata, however, rejected a call from the LDP to impose limits on new investment and route openings by JAL, maintaining such actions lack legal precedent.

The airline filed for bankruptcy protection in January 2010. It then received ¥350 billion from the state-backed Enterprise Turnaround Initiative Corp. of Japan and has been granted reductions in corporate taxes and depreciation under the Corporate Rehabilitation Law.

The LDP and JAL’s main rival, All Nippon Airways Co., allege that bolstering JAL’s financial base with public support has distorted competition in the industry.