Corporate failures drop 6.7% in May, 1st fall in year

TOKYO, June 8 Kyodo -
The number of corporate bankruptcies in Japan dropped 6.7 percent in May from a
year earlier to 1,203, posting the first year-on-year fall in 12 months, a
private credit research agency said Monday.
The debts left by the failed firms contracted 1.8 percent to 539.88 billion
yen, the second straight month of decline, Tokyo Shoko Research said.
The number of bankruptcies was also the smallest in the last 12 months, the
agency said. The Tokyo Shoko Research figures cover bankrupt firms with debts
of 10 million yen or more.
The number of prefectures where failures saw a year-on-year fall came to 25,
compared with 15 prefectures where bankruptcies increased and marking the
second straight month that prefectures where failures fell outnumbered those
where failures rose.
The developments ''appear to have stemmed from the government's financial
assistance program, including providing emergency credit guarantees'' to
credit-starved struggling companies, the agency said.
The program, devised by the administration of Prime Minister Taro Aso to soften
the impact of the global economic downturn on the Japanese economy, is designed
to help struggling firms take out commercial bank loans by offering official
repayment guarantees using such venues as prefectural credit guarantee
associations.
The total number of bankruptcies included 67 cases resulting from a shortage of
operating funds, down 22.0 percent for the first drop below 70 in 15 months,
Tokyo Shoko Research said.
Given businesses' increased reliance on public funds, however, it is too early
to say that the growth in corporate failures will come to a halt anytime soon,
analysts said.
Failures of construction companies decreased 21.3 percent for the third
consecutive month of fall. But those of manufacturers jumped 13.4 percent.
The research agency also reported a 50.0 percent jump in bankruptcies among
automobile-related companies.
The number of large-scale bankruptcies of firms with debts of 1 billion yen or
more was limited to 63, the smallest seen so far this year.
Among listed companies, Tokyo-based apartment developer Joint Corp., which went
under with debts of 147.6 billion yen, was the sole case of bankruptcy in May
and brought to 17 the total number of bankruptcies of listed firms in the
January to May period.
The total was at a relatively high level, trailing 19 logged in the
corresponding period of 2002.
Separately, Teikoku Databank, another private credit research firm, said 1,057
companies went under in May, up 6.3 percent from a year earlier, accompanied by
debts totaling 511.59 billion yen, up also 6.3 percent.
==Kyodo