In a concerning development, the number of corporate bankruptcies in fiscal 2023 with liabilities of at least ¥10 million increased by 31.5% compared to the previous year, totaling 9,053. This marked the first time in nine years that the number of bankruptcies surpassed 9,000. The rise in bankruptcies was mainly attributed to small and midsize companies struggling to raise prices to cover escalating material and other costs, as well as labor shortages.
One troubling trend that emerged was an increase in the number of companies collapsing after utilizing a COVID-19 relief program that provided virtually interest-free and collateral-free loans. A record 622 companies experienced this fate. Additionally, bankruptcies resulting from higher prices also saw a significant increase, rising by 1.7 times to 684 cases.
Each of the 10 industry sectors surveyed experienced a growth in bankruptcies for the second consecutive year. The construction sector, facing challenges from escalating material and labor expenses, witnessed a 39.4% surge in bankruptcies to 1,777. Similarly, the service sector saw a 34.8% increase with 3,028 bankruptcies reported. The transportation sector reported a 25.6% rise in bankruptcies, totaling 441 cases, which was impacted by driver shortages and rising fuel costs.
The total liabilities left by failed companies expanded by 5.9% to ¥2.463 trillion yen, exceeding ¥2 trillion for the second consecutive year
