Aletheia Clinic, a prominent medical hair removal chain, filed for bankruptcy Tuesday, plunging tens of thousands of customers into financial limbo in what is the largest collapse ever recorded in Japan’s beauty industry.

Joint operators Mijitsukai and Yazakurakai submitted their bankruptcy applications to the Tokyo District Court on Tuesday, which approved the filings the same day, according to a statement posted on the clinic’s official site. All locations immediately ceased operations.

Mijitsukai owes ¥7.29 billion ($48.09 million) to 57,498 creditors, while Yazakurakai has liabilities of ¥5.17 billion owed to 34,320 creditors — a combined total of nearly ¥12.4 billion. Approximately 92,000 customers will be impacted by the sudden closure, according to a report Tokyo Shoko Research released.

Aletheia Clinic was a major player in the hair removal sector, gaining widespread recognition through advertising campaigns featuring well-known actors. The chain had experienced rapid growth, peaking in the fiscal year ended April 2021 with an annual revenue of ¥16.3 billion.

However, pandemic-related challenges and mounting industry competition led to fewer customers. By fiscal 2023, sales had dropped to ¥13.4 billion, with advertising expenses contributing to a net loss of ¥75.3 million.

Hair removal clinics’ business models heavily rely on prepaid package deals, offering significant discounts for customers who book multiple sessions in advance. Some packages can cost upwards of hundreds of thousands of yen.

However, according to the clinic’s trustee, refunds for customers who paid for future bookings in advance are “extremely unlikely,” leaving tens of thousands in the lurch.

For many companies, the money obtained from prepaid package deals is often used to fund aggressive expansion. However, if contract numbers stagnate, the burden of expansion costs and advertising expenses can become unsustainable, leaving businesses unable to refund customers — a scenario that appears to be the case for Aletheia Clinic.

Aletheia’s downfall is part of a larger trend in Japan. Bankruptcies in the nation's beauty industry have surged to record levels, with 99 cases reported from January to November, surpassing the 88 recorded in all of last year, according to Tokyo Shoko Research.