Corporate bankruptcies in Japan rose 12.1 percent in fiscal 2000 from a year earlier to 18,926 cases, while debts left behind surged 130.7 percent to 25.98 trillion yen, a record postwar high, a private research institute said Friday.
The number of bankrupt firms in the fiscal year to March 31 showed the first year-on-year increase in two years, topping 18,000 for the first time in 15 years, Teikoku Databank said in a report covering bankruptcies with debts of 10 million yen or more.
The number of bankruptcy cases is the third-largest in the postwar period, the institute said, adding that the amount of total liabilities topped the 25 trillion yen mark for the first time.
Behind bloated liabilities were the failure of Kyoei Life Insurance Co., which failed in October with 4.53 trillion yen in liabilities, a record postwar high, and two other major bankruptcy cases with total liabilities of over 1 trillion yen.
Failures of listed firms during fiscal 2000 reached 15 cases, a record high, of which nine companies were those listed on the first section of the Tokyo Stock Exchange.
Recession-induced bankruptcies totaled 14,188 cases. The ratio of recession-caused failures to the total number came to 75 percent, staying above the 70 percent line for the third straight year.
By industry, bankruptcies rose in the construction, manufacturing, wholesale, retail, transportation/communications and services sectors, but fell in the real estate industry, Teikoku Databank said.
In March, bankruptcies fell 3.8 percent from a year earlier to 1,703 cases for the first decline in two months.
The amount of liabilities left behind, however, shot up 265.9 percent from a year earlier to 2.37 trillion yen, topping the 2 trillion yen mark for the first time in five months.
Recession-induced bankruptcies totaled 1,262 cases. The ratio of recession-caused failures to the total number came to 74.1 percent, exceeding 70 percent for the 20th straight month.
Teikoku Databank said that the pace of corporate bankruptcies was unlikely to slow for fiscal 2001. Small and midsize firms are resorting to high-interest consumer loans, as banks cut off smaller problem borrowers while postponing cutting large loans from their balance sheets.
“Now that banks are losing their function as financial intermediaries, we will not be able to avoid a bankruptcy rush on par or greater than (fiscal 2000),” said Katsuyuki Kumagai, general manager of Teikoku Databank’s Information Department.
At the same time, Kumagai was skeptical that the ruling bloc’s emergency economic package, announced earlier this month, would solve banks’ bad debt problem. The plan calls for major banks to remove existing problem loans from their balance sheets in two years.
Banks will only write off loans to nonbanks and midsize firms, while postponing calling large loans to general contractors and distributors through partial debt forgiveness, he said.
Of the 295 companies that have been forgiven their debts since 1985, 25.8 percent failed anyway, according to Teikoku Databank.
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