Japan’s June bankruptcies soar 11.7% - liabilities up 56.2%

July 11, 2008
By Ken Worsley

Although the number of bankruptcies in Japan had decreased by 1.5% May, that good news has been fully tempered by a string of negative data on June and first-half 2008 bankruptcy numbers. First, according to Tokyo Shoko Research, 1,324 firms went bust in Japan in June, which was an 11.7% rise against June 2007. The total liability left behind from these bankruptcies stood at 492 billion yen, which was a whopping 56.2% higher than a year ago.

Another firm, Teikoku Databank, put the number of bankruptcies in June at 1,065, for an 8.1% rise year-on-year. According to Teikoku, liabilities soared 40.3% to 472 billion yen. Both TSR and Teikoku include bankruptcies involving debts of 10 million yen or more, while Teikoku only counts those cases which are administered by a bankruptcy court. Teikoku had registered a fall of 1.9% in May.

For the first half of 2008, TSR announced that 7,544 firms had declared bankruptcy, which was a 6.9% increase on the previous year. Liabilities were up 19.8% to 3.20 trillion yen. On the other hand, Teikoku’s data saw a rise of 11.6% to 6,022 cases in the first half of 2008. The total liabilities of these cases was up 17.4% to 3.02 trillion yen.

Looking at TSR’s June data, we see the construction industry leading the way with 389 bankruptcies for about 105 billion yen. Following that was service industry (254), wholesalers (198), manufacturing (185), retail (151), real estate (52), IT (45), transportation (39), finance and insurance (8), and agriculture (3).

Although the real estate industry saw far fewer bankruptcies than the leading sectors, real estate led in terms of overall liabilities in June, with 142 billion yen left behind. In part, this is being blamed on tighter bank lending to real estate development firms (even as bank lending looks to be growing slightly), which has led to downward pressure on property values. More on this to follow.

Filed Under Bankruptcy, Business, Economic Reports