TOKYO: The number of corporate bankruptcies with liabilities of at least 10 million yen in Japan in fiscal 2023 rose 31.5 percent from the previous year to 9,053, topping 9,000 for the first time in nine years, a survey by Tokyo Shoko Research Ltd. showed Monday.

In the year through March, bankruptcies rose mainly among small and midsize companies as they struggled to raise prices to reflect higher material and other costs. Labor shortages were also behind the rise in bankruptcies.

The number of companies that collapsed after using a COVID-19 relief program that offered virtually interest-free and collateral-free loans rose 14.3 percent to a record 622.

Meanwhile, bankruptcies caused by rising prices jumped 1.7-fold to 684.

All 10 surveyed industry sectors logged more bankruptcies for the second straight year.

The construction sector, struggling with higher material and labor costs, saw bankruptcies surge 39.4 percent to 1,777, while the service sector recorded 3,028 bankruptcies, up 34.8 percent.

Bankruptcies increased from 25.6 to 441 percent in the transportation sector, which is facing the so-called 2024 problem of driver shortages, as well as rising fuel prices.

Total liabilities left by failed companies expanded 5.9 percent to 2,463 billion yen, exceeding 2 trillion yen for the second year in a row.

In March alone, bankruptcies increased 11.9 percent to 906, with liabilities totaling 142.2 billion yen.

With higher interest rates expected after the Bank of Japan ended its negative interest rate policy in March, Tokyo Shoko Research warned that the pace of bankruptcies may accelerate after this summer.

JIJI Press