The number of corporate bankruptcies in 1998 jumped to 19,171, the second-highest level in postwar history, a private research firm announced Tuesday.
Despite sharp falls in such bankruptcies in November and December due to government measures to relieve firms’ fundraising difficulties, the number of bankruptcies for the entire year remained high, rising 17.1 percent from 1997, said Teikoku Databank.
The total liabilities left by failed companies last year also surged, reaching a postwar high of 14.38 trillion yen, the statistics show.
The report, which covered bankruptcies with liabilities of 10 million yen or more, also says that some 70 percent of all failures in 1998 were caused by such factors as accumulation of nonperforming loans and sluggish sales amid the prolonged recession.
All industries posted an increase in the number of bankruptcies in 1998 compared with the previous year. The construction industry suffered the largest number of bankruptcies with 5,440, up 13.7 percent from the 1997 figure. Last year marked the first time in 13 years the number of such bankruptcies in the sector topped 5,000, the report says.
The manufacturing industry also logged 3,325 bankruptcies last year, up 24.7 percent from 1997 and surpassing the 3,000 threshold for the first time in 12 years. The annual statistics reflect the lingering effects of financial institutions’ stringent attitude toward lending.
The credit research firm cited 759 bankruptcies last year that stemmed from private banks’ unwillingness to lend money to firms. The number marked a whopping 235.8 percent increase from the previous year.
While bankruptcies fell in the year’s final months on the government’s introduction of a new credit guarantee system and the strengthening of various state-affiliated financial institutions’ lending functions, the brisk pace at which they occurred during the earlier months weighed heavily in total results for the year, Teikoku Databank officials said.