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Slumping sales send bankruptcies soaring

Date Posted: 2007-01-19

Business bankruptcies are on the rise in Okinawa, fueled by depressed sales and uncollectible debts.

Teikoku Data Bank’s Okinawa branch has analyzed bankruptcy data for 2006, documenting 46 bankruptcies with debts in excess of ¥44,152,000,000. The study shows the average business default lost more than ¥10 million. Officials say bankruptcies rose 32.4% over a year ago.

Bankruptcies were most prevalent in small and medium-size businesses, where combinations of strong competition and mounting corporate debt accounted for the filings. Last year’s bankruptcy losses were 21% more than in 2005.

Building industry companies were the leading bankruptcy contributors, with 25 going under. Wholesale businesses were second, with six companies folding. Depressed sales were ranked the most severe reason for companies failing, with 41.2% of the bankruptcies attributed to declining business. Failure to collect on accounts receivables and other debts were the second leading cause. Lax corporate management was also cited as a leading cause of bankruptcies.

Twenty-five bankruptcies had debts in the ¥100-¥500 million range, while 12 tallied debts of ¥50-¥100 million grouping. Officials say 81% of the failed businesses are small and medium-size companies who were unable to compete with major mainland Japanese companies.

Corporate rehabilitation, the ability to resurrect and revitalize itself, was limited. Only six companies were able to move out of bankruptcy during 2006.

Seven companies closed their doors in December, listing debts of ¥26,270,000,000.

Four were within the building and construction industry, and another was a golf management company.

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