Tokyo, 11 June, /AJMEDIA/
The number of corporate bankruptcies in Japan for May rose 42.9 percent from a year earlier to 1,009, making it the first time in about 11 years that the monthly figure exceeded the 1,000 mark, as many indebted firms struggle to recover after the coronavirus pandemic, a credit research company said Monday.
With companies facing rising prices, a labor shortage, and the need to repay debt taken out during the pandemic, the annual figure is on course to exceed 10,000 for the first time since 2013 when it stood at 10,855, according to Tokyo Shoko Research Ltd.
In May, 67 of the bankruptcies were companies that took out unsecured, interest-free loans provided as part of the government’s measure to help small and medium-sized enterprises stay afloat amid the pandemic. The figure came to the same level as in March when the figure was an all-time high.
Bankruptcies attributed to elevated prices stood at 87, the highest number since the onset of the pandemic, the survey showed.
A weak yen has also pushed up costs of raw materials and energy, leaving smaller companies in a difficult situation because they cannot sufficiently shift the cost on prices.
The number of insolvencies linked to a labor shortage on the back of wage hikes and other reasons has also surged, according to the survey.
“A weak yen, inflation and labor shortage, which came at the time when COVID-related support was ending, is weighing on businesses,” Tokyo Shoko Research said in its report.
“The number of bankruptcies will likely continue to rise,” it added, citing that it expects some companies to go bankrupt due to funding difficulties despite posting a profit, as well as a delayed recovery in their business.
All 10 industry categories saw an increase in bankruptcies in May, with the service sector logging the largest number at 327 cases, followed by the construction sector at 193 cases.
About three quarters of the overall figure were small-scale bankruptcies where the debt was less than 100 million yen ($637,000).
© KYODO
