Tokyo Bankruptcies Drop 10.5% in Fiscal Year

Corporate bankruptcies in Tokyo dropped 10.5 percent in the business year that ended on March 31, 2015 from a year earlier — the sixth straight year of declines — according to credit research company Teikoku Databank Ltd.

Teikoku Databank announced on April 7 that there were 1,767 bankruptcies in the Japanese capital in fiscal 2014. The firm furthermore stated that total debt left by failed companies had also dropped for six consecutive years, with such debts in fiscal 2014 dropping 25.5 percent from the previous year to about 600.59 billion yen — the least since fiscal 2000. On the other hand, bankruptcies caused by the depreciating yen last fiscal year tripled from fiscal 2013.

According to Teikoku Databank’s Tokyo branch, the number of bankruptcies — defined as insolvencies of businesses with 10 million yen or more in debt, including cases in which companies filed for bankruptcy protection or took other legal measures — dropped to 1,974 in fiscal 2013. That marked the first time bankruptcies had fallen below 2,000 in a fiscal year since 2000, when 1,669 businesses went officially bust. With the rate falling again in fiscal 2014, total outstanding debts have also come in under 1 trillion yen for the third consecutive year.

In response to the so-called “Lehman shock” of 2008, the Act Concerning Temporary Measures to Facilitate Financing for Small and Medium-Sized Enterprises, etc. (the SME Financing Facilitation Act) came into force in December 2009, calling on financial institutions to allow for the extension of repayment of debts. That helped reduce the number of bankruptcies. The SME Financing Facilitation Act expired at the end of March 2013, but it is believed to have led to a reduction of bankruptcies as financial institutions have continued to allow companies to defer repayment of their debts, among other supportive measures.

via Mainichi

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza