The number of corporate bankruptcies with liabilities of at least ¥10 million in fiscal 2023 increased by 31.5% from the previous year to 9,053, surpassing 9,000 for the first time in nine years, according to a survey by Tokyo Shoko Research released on Monday.
During the year ending in March, bankruptcies primarily surged among small and midsize companies, which struggled to raise prices to offset higher material and other costs. Labor shortages also contributed to the rise in bankruptcies.
The number of companies collapsing after utilizing a COVID-19 relief program, which provided virtually interest-free and collateral-free loans, reached a record high of 622, marking a 14.3% increase.
Bankruptcies triggered by escalating prices soared to 684, a 1.7-fold increase. All ten industry sectors surveyed experienced a consecutive annual rise in bankruptcies.
The construction sector, grappling with increased material and labor costs, witnessed a 39.4% surge in bankruptcies to 1,777, while the service sector recorded 3,028 bankruptcies, marking a 34.8% rise.
Bankruptcies in the transportation sector rose by 25.6% to 441, attributed to the “2024 problem” of driver shortages and escalating fuel prices.
The total liabilities left by failed companies grew by 5.9% to ¥2.463 trillion, exceeding ¥2 trillion for the second consecutive year.
In March alone, bankruptcies rose by 11.9% to 906, with liabilities totaling ¥142.2 billion.
Tokyo Shoko Research cautioned that the pace of bankruptcies may accelerate after the summer, as higher interest rates are expected following the Bank of Japan’s decision to end its negative interest rate policy in March.
