The number of corporate bankruptcies with liabilities of at least ¥10 million in fiscal 2023 rose 31.5% from the previous year to 9,053, topping 9,000 for the first time in nine years, a survey by Tokyo Shoko Research showed Monday.

In the year through March, bankruptcies mainly rose among small and midsize companies as they struggled to raise prices to reflect higher material and other costs. Labor shortages were also behind the rise in bankruptcies.

The number of companies that collapsed after using a COVID-19 relief program that offered virtually interest-free and collateral-free loans rose 14.3% to a record 622.

Meanwhile, bankruptcies caused by rising prices were 1.7 times higher, jumping to 684.

All 10 surveyed industry sectors logged more bankruptcies for the second straight year.

The construction sector, which is struggling with higher material and labor costs, saw bankruptcies surge 39.4% to 1,777, while the service sector recorded 3,028 bankruptcies, up 34.8%.

Bankruptcies increased 25.6% to 441 in the transportation sector, which is facing the so-called 2024 problem of driver shortages, as well as rising fuel prices.

Total liabilities left by failed companies expanded 5.9% to ¥2.463 trillion yen, exceeding ¥2 trillion for the second year in a row.

In March alone, bankruptcies increased 11.9% to 906, with liabilities totaling ¥142.2 billion.

With higher interest rates expected after the Bank of Japan ended its negative interest rate policy in March, Tokyo Shoko Research warned that the pace of bankruptcies may accelerate after this summer.