Japan Corporate Bankruptcies Jumped to Six-Year High

Japan Corporate Bankruptcies Jumped to Six-Year High

April 8 (Bloomberg) -- Japan’s corporate bankruptcies rose to a six-year high in March as companies struggled to obtain funds to close books in the final month of the fiscal year.

Bankruptcies climbed 14.1 percent from a year earlier to 1,537 cases, the most since March 2003, Tokyo Shoko Research Ltd. said in Tokyo today.

Azel Corp., a real-estate company, last month became the 14th publicly traded firm to go out of business as Japan’s recession drives down property values and prompts banks to cut off lending. Companies in the world’s second-largest economy say access to funds is the tightest in a decade, the central bank’s Tankan survey showed last week.

“There are still a lot of uncertainties in the economy,” said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute in Tokyo. “Unemployment and consumer spending will worsen with an increase in bankruptcies.”

Recent reports indicate the economic slump driven by a collapse in exports in spreading throughout the economy. The Bank of Japan’s Tankan survey last week showed manufacturers’ confidence dropped to a record low and a separate report showed the jobless rate advanced to a three-year high of 4.4 percent in February.

Aso this week ordered stimulus spending equivalent to at least 10 trillion yen ($100 billion), which would be his largest commitment to spurring growth since taking office in September. The Bank of Japan has also expanded the range of collateral it accepts in an effort to encourage lending to companies.

Companies Struggling

The government plans to make 37 trillion yen available to companies struggling to meet their funding needs, the Nikkei newspaper reported today, without citing where it obtained the information.

Real-estate companies have been affected most by the downturn as commercial land prices slumped to a three-year low and residential property values fell to the lowest since 1984.

Pacific Holdings Co., a real-estate manager, filed for bankruptcy protection last month with 163.6 billion yen in liabilities and Azel collapsed owing 44.2 billion yen.

BLOOMBERG