Japnaese corporate bankruptcies surge to a six-year high

Japnaese corporate bankruptcies surged to a six-year high of 14.1 per cent to 1,537 cases in March from the same month a year earlier with debts of 10 million yen or more, according to private credit research agency Tokyo Shoko Research Ltd.

The reearch is based on a survey of Japanese firms that collapsed with debts of 10 million yen or more($100.34 million).

Japan's corporate bankruptcy debt grew 127.96 per cent to 1.08 trillion yen ($10.7 billion), the 8th highest since post-war.

The financial year ended in 31st March, the number of bankruptcies rose 12.4 per cent to 16,146 cases, for the third consecutive year.

This is the 10th successive month of increasing number of bankruptcies in the wake of the country facing its worst ever recession since WW II and also the highest recorded since the end of World War II, according to published data. The December report showed bankruptcies surging 24 per cent year-on-year. (See: Japan's key economic data figures plunge)

The survey showed that 45 companies listed on the stock exchange went bankrupt compared to seven in the previous year. Of these failed companies 68.8 per cent were real estate and construction firms.

Last month, Azel Corporation, a construction company, filed for bankruptcy with 44.2 billion yen ($451 million) debt as a result of the slump in the property market following the global financial turmoil and credit crunch.

The deepening recession showed bankruptcies increased in almost all the 10 industrial sectors with the transportation sector recording the fastest percentage-wise rise in bankruptcy of 32.8 per cent. This was followed by the real estate sector at 30.2 per cent and information and communications sector at 29.1 per cent.

With decline in the export orders 283 manufacturing companies and 63 IT companies went bankrupt last month.

Companies that went bankrupt with debts of 100 billion yen or more this year was 12 compared to three in 2007, which included the second-biggest corporate failure in the postwar period in Japan - Lehman Brothers Japan Inc with the combined liabilities of the Japanese group totaling 3.43 trillion yen ($32.5 billion) and real estate investor Pacific Holdings with about $1.65 billion in debt, Japan's third-biggest failure this year.

Last week, Japan's key Tankan index of business sentiments among corporates for the quarter ended March hit a record low, indicating a drastic slowdown of businesses in the wake of the global crisis pushing the economy deeper into its worst post-war recession. (See: Japan's Tankan index of business sentiments at 35-year low )

Also Japan's composite index (CI) of 'coincident economic indicators' which was released last week dropped 2.7 points to a preliminary 86.8 for the seventh consecutive month in February from 89.5 in January. (See: Japan's key economic composite index shrinks 2.7 points in February)

The jobless rate  showed an advance of 4.4 per cent in February, a three-year high.

The government announced the third economic stimulus package, worth 10 trillion yen (over $100 billion) last week in a bid to rescue the economy from the current economic crisis.(See : Japan plans $100 billion third economic stimulus)

All the recent data indicate that the economic recession in Japan is mainly hit by declining exports.