Japan: Bankruptcies rise 22.7% over last year

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Bankruptcies rise 22.7%, but liabilities up 200%

The number of corporate bankruptcies in November rose 22.7 percent from a year earlier to 1,683 for the 13th straight monthly increase, Teikoku Databank Ltd. said Thursday. Liabilities surged 199.3 percent to 1.222 trillion yen, up for the seventh straight month, the private credit-research agency added. The ratio of slump-induced failures hit a new high of 78 percent, exceeding the previous record of 77.4 percent set in October.

Teikoku Databank's monthly survey covers bankruptcies with liabilities of 10 million yen or more. The figures bring to 17,521 the number of corporate bankruptcies in the January-November period.

Teikoku Databank said the number of corporate bankruptcies is expected to increase toward the end of the year, given fierce competition among small and midsize firms. This may revive anxieties about a banking system already riddled with bad loans, the subsiding of the information technology boom and a slowdown in exports, the firm said.

The annual number of corporate bankruptcies in 2000 is sure to be the second highest on record, eclipsing the 19,171 posted in 1998, Teikoku Databank said. The postwar record high for bankruptcies is the 20,841, registered in 1984.

Liabilities left behind by companies that went under between January and November have already exceeded the previous annual record high of about 14.4 trillion yen registered in 1998.

Notable among November bankruptcies was that of audiovisual equipment maker Akai Electric Co., which was listed on the first sections of the Tokyo, Osaka and Nagoya stock markets. This brought the number of listed firms that went bust this year to 11, equaling the postwar record high of 11 registered in 1965.

A total of 1,313 companies went under in November because of the slow economic recovery, slack sales, a slump in exports, difficulties in collecting sales credits and mounting bad loans. The number of slump-related bankruptcies in November was the third-highest monthly figure after the 1,325 in October.

Contractors trim debt Japan's 73 leading contractors held more than 10.5 trillion yen in interest-bearing liabilities on a consolidated basis at the end of September, Teikoku Databank Ltd. said Thursday. That figure was a decrease of 347.4 billion yen, or 3.2 percent, from the end of March.

The companies that reduced their debts during the April-September period are either large-scale contractors with strong financial bases or those whose creditors waived claims to loans, the private credit research agency said.

But many second-tier construction companies are still restructuring and continue to be saddled with high levels of liabilities.

Kumagai Gumi Co. held the largest amount of debt as of Sept. 30, some 1.12 trillion yen. It is asking its creditors to forgive 450 billion yen in loans.

Taisei Corp. held the second largest amount at 917.2 billion yen, followed by Fujita Corp. at 870.4 billion yen.

Four other construction firms held debts of more than 500 billion yen, Teikoku said. Fifty-two companies had reduced their debts from March levels.

Hazama Corp. achieved the largest reduction, 89.3 billion yen, thanks to its creditors agreeing to forgive a total of 105 billion yen in September.

Daisue Construction Co. cut its debts by 66.6 billion yen, also as a result of debt forgiveness.

http://www.japantimes.co.jp/cgi-bin/getarticle.pl5?nb20001215a4.htm

The Japan Times: Dec. 15, 2000

-- Carl Jenkins (somewherepress@aol.com), December 15, 2000


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