Business

Corporate bankruptcies continue decline into 19th month

The number of corporate bankruptcies in Japan dropped 16.8 percent in July from a year earlier to 1,151, down for the 19th straight month.

Teikoku Databank, a private-sector corporate credit research agency, said Friday in its monthly report covering failures with debts of 10 million yen or more that combined debts left by failed firms fell 13.6 percent to 605.34 billion yen, remaining below 1 trillion yen for the fourth month in a row.

The decline in the number of failures is mainly attributable to improved business performances in the private sector and a pickup in private consumption stemming from such factors as increasing demand for digital home electronics, Teikoku Databank said.

A rise in domestic demand stimulated by this summer’s heat wave also helped pull down the number of corporate failures, it said.

But the corporate recovery is not necessarily the main cause of the decline in bankruptcies, it said. A reduction in dishonoring of bills resulting from credit contraction by companies, and public financial assistance to small and midsize companies also helped, it said.

Teikoku Databank said the 19-month sequence of declines in the number of bankruptcies is the third-longest since the end of World War II.

The number of failures in which firms were forced to discontinue business under court-supervised proceedings came to 453, accounting for 39.4 percent of the July bankruptcies. The number of companies being forced to fail is on the increase, Teikoku Databank said.

In other cases of bankruptcy, companies are allowed to continue operations in procedures involving debt waivers and cuts to their staff levels.

The number of companies that filed for bankruptcy protection under the Civil Rehabilitation Law dropped 31.6 percent to 52.

By industry, declines in the number of bankruptcies in the construction and wholesale industries stood out. Bankruptcies in the construction industry fell 21.7 percent to 357 cases, while those in the wholesale industry dipped 24.5 percent to 203 cases.

Of the July total, 869 companies, or 75.5 percent, collapsed due to recession-linked factors, including poor sales and the inability to pay off bank loans.

Failures of companies that had been in business for 30 years or longer numbered 332, accounting for 28.8 percent of the total.

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