Corporate failures soar to 17-year high in Japan

By Daisuke Takato
Bloomberg News Service

TOKYO — Japanese corporate bankruptcies rose to a 17-year peak in 2001 as banks cracked down on delinquent borrowers such as supermarket chain operator Kotobukiya Co. and general contractor Aoki Corp.

Corporate failures rose 2.6 percent last month from a year earlier to 1,532, Tokyo Shoko Research Ltd. said. For the year, the number of bankruptcies rose 2.1 percent to 19,164, the highest since 1984, when 20,841 companies went bust.

With unemployment rising to a 50-year high and consumers tightening their belts, more companies are going under. Kotobukiya filed for bankruptcy protection last month with $2.2 billion in debt after failing to obtain a reprieve from banks.

"We can expect to see an increasing number of bankruptcies in coming months as bankruptcies of larger companies will cause chain reactions among their suppliers and affiliates," said Minako Iida, an economist at Deutsche Securities (Japan) Ltd.

"Government efforts to aid companies affected by the bad loan write-offs will have limited impact," said Hirotake Araya, a spokesman for Tokyo Shoko. "We can expect to see bankruptcies surpass 20,000 cases next year."

Bankruptcies at construction companies, which employ a tenth of Japanese workers, fell 5.5 percent to 463. Bankruptcies at financial and insurance firms rose 26.7 percent from a year earlier to 76 cases, while 296 manufacturers filed for bankruptcy, an increase of 9.2 percent.