Japan sees 100 Covid19-related bankruptcies in July
Japan has seen over 400 companies filing for bankruptcy as a result of Covid19 outbreak, reports Bloomberg News. In July, as many as 100 companies have filed for bankruptcy due to the spread of the pandemic.
The Bloomberg News reported on 5 August that Vacancies at offices in central Tokyo rose by the most on record in July as the economic impact of Covid19 continued to spread and virus-related bankruptcies in the capital reached 100.
Despite the rise in Covid19 related bankruptcies in the country, the number of insolvencies reported in the first half of 2020 showed a decline year-on-year as the number of bankruptcies fell from 3,998 in first half of 2019 to 3,943 in 2020, according to a report by Teikoku Databank, one of the Japan’s largest corporate data firm.
This is the third consecutive year of decline in the number of bankruptcies.
The report released by Teikoku Databank further show that total liabilities in the first half of 2020 were 631,679 million yen, down 15.9% from previous year’s 750,760 million yen.
This was the third consecutive year-on-year decrease and the lowest amount on a half-year basis since 2000 as a year that can be compared. The largest amount of liabilities was posted by White Bear Family Co Ltd. (Osaka, Civil Rehabilitation Act, June) with liabilities of approximately 27,800 million yen.
According to Teikoku Databank’s report, the number of large-scale bankruptcies was at a low level.
There were five bankruptcies of companies with liabilities of 10 billion yen or more (down 28.6% year-on-year). For the first half, this was the lowest ever and roughly on a par with 2014 and 2017.
From sectoral or industry perspective, service industries saw a 3.9% year-on-year decline as the sector witnessed 933 bankruptcies. The retail industry (935 bankruptcies, up 3.3% year-on-year) was the only one to see a year-on-year increase, and in particular the number of bankruptcies of restaurants (398 bankruptcies) was up 13.7%, the highest on a half-year basis since 2000. The surge is bankruptcies filed by restaurant sector clearly show it is one of the most severely hit by Covid19.
As far as reasons for bankruptcies cited by the companies, 238 bankruptcies were caused by a difficulty in finding a successor (up 15.5% year-on-year), marking the third consecutive year of year-on-year increase, while 85 of those were caused by a labor shortage (down 4.5% year-on-year), marking the first year-on-year decrease in five years.
There were 261 post-moratorium bankruptcies (up 2.0% year-on-year), marking the second consecutive year of year-on-year increase.
