Fri, Aug 15, 2003 - Page 10 News List

Bankrupt Japanese companies become exception, not rule


Japanese bankruptcies had their biggest drop in eight months last month as the world's second-largest economy extended a recovery from recession.

The number of corporate failures fell 19.8 percent from a year earlier to 1,377 cases, the lowest since September 1999, credit researcher Tokyo Shoko Research Ltd said in Tokyo.

Bankrupt companies such as golf-course operator Kashimanomori Country Club KK owed ?698 billion (US$5.85 billion), two-fifths less than a year earlier.

An 18-month recovery from Japan's third recession since 1991 has helped companies burdened by debt accumulated during the 1980s asset bubble. The pace of bankruptcies may rise as Prime Minister Junichiro Koizumi pushes banks to clean up ?44.5 trillion in bad debt, analysts said.

"There are still many overcrowded industries and sales of companies aren't growing," said Motomitsu Honma, an economist at Sumitomo Mitsui Asset Management Co's economic research team.

Japan's economy grew 0.6 percent in the second quarter from the first quarter, seasonally adjusted, the Cabinet Office said this week. That was twice the revised 0.3 percent growth of the first quarter.

Economic growth hasn't ended five years of falling prices, which have eroded profits and made it harder for companies to pay debt. Without adjusting for declines in prices, Japan's nominal GDP grew 0.1 percent in the second quarter.

Core consumer prices, excluding fresh food, haven't risen from year-earlier levels since April 1998.

Privately held Kashimanomori filed for court protection from creditors on July 10 with ?35 billion in debt. Yamaichi Land KK, a privately held real-estate company based in Tokyo, went belly up on July 11 with debts of ?83.3 billion.

Colin Corp, a maker of blood-pressure monitors, filed for court protection on July 14 with ?19.4 billion in liabilities after rapid expansion left it with more inventory than it could sell.

Bankruptcies last month put 12,353 people out of work.

That's the second-lowest biggest drop this year, and 33 percent fewer than the same month a year ago.

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