ArrowArtboardCreated with Sketch.Title ChevronTitle ChevronEye IconIcon FacebookIcon LinkedinIcon Mail ContactPath LayerIcon MailPositive ArrowIcon PrintTitle ChevronIcon Twitter
Business trends

Business failures in Japan hit monthly high of 780 in June

Coronavirus proves especially detrimental to travel and restaurant industries

An Itadori Tokyo noodle shop (left) and  Hotel WBF: Operators of both establishments were among the 780 companies that filed for bankruptcy in June.

TOKYO -- Bankruptcies in Japan hit 780 in June, marking the highest monthly total for the year, as hotels and restaurants were hammered by the coronavirus pandemic.

According to Tokyo Shoko Research, the number of companies that filed for bankruptcy in June rose 6.3% from the previous year, while total liabilities increased 48.1% year on year to 128.8 billion yen ($1.2 billion).

Figures show that 743 companies became insolvent in April and 314 in May. The May bankruptcies were the fewest since June 1964, largely due to courts accepting fewer bankruptcy applications as a result of pandemic-induced operating restrictions. With the lifting of the emergency declaration in late May, courts started returning to normal, and the number of bankruptcies soared.

"Along with increasing numbers of bankruptcies due to the labor shortage, the coronavirus has furthered the demise of companies," Yoshihiro Sakata at Tokyo Shoko told the Nikkei Asian Review.

Even before the pandemic, the number of bankruptcies had been increasing. Figures from December to April showed double-digit percentage gains amid rising labor costs and a tax hike that slowed consumption.

Of companies declaring bankruptcy in June, 94 were linked to the coronavirus -- the highest figure since February -- Tokyo Shoko reported.

The pandemic also grounded the travel industry.

Osaka-based travel agency White Bear Family in June filed the biggest bankruptcy in terms of debt amount, having piled up debts of 27.8 billion yen. The company applied for court protection in late June, announcing that it plans to conclude a sponsorship agreement with Japanese hospitality group Hoshino Resorts.

White Bear group company WBF Hotels & Resorts collapsed in April after Prime Minister Shinzo Abe declared a state of emergency. WBF had been operating about 30 hotels in major tourist spots such as Kyoto and Hokkaido but had to suspend operations.

In June, 16 hotel operators filed for bankruptcy, up 700% from a year earlier.

Hokkai Kanko, a Mie Prefecture hotel operator with debts of 4.68 billion yen, also went bankrupt in June. According to Tokyo Shoko, even before the pandemic the company had been struggling amid fierce competition.

Restaurants also suffered, with 98 going under in June, a 48.4% jump compared to a year earlier.

One of the biggest bankruptcies in the month was Itadori Tokyo, an operator of Japanese noodle and sushi restaurants. The company had debts totaling 3.2 billion yen. According to research company Teikoku Databank, of the 41 restaurants the company was running in December, only 7 remained in June.

Although the government has lifted the state of emergency nationwide, analysts said bankruptcies will increase.

"Courts handling bankruptcies are gradually resuming normal operation and will be processing cases that had been postponed by the coronavirus," said Sakata of Tokyo Shoko Research. "There is also a risk of a second wave of coronavirus infetions," he added.

Tokyo confirmed more than 220 new infections on Thursday, its highest single-day total.

Sakata expects to see more food-service industry bankruptcies in the coming months as customer numbers plummet amid seating restrictions at restaurants.

Masamichi Adachi, UBS Securities Chief Economist for Japan agreed, saying that "[customer] service that requires humans will be tough until a vaccine is available."

For the travel industry, Adachi said the government's 1.7 trillion-yen "go-to campaign," worth 0.3% of the country's annual GDP, could boost business, though inbound tourism and the consumption it drives will not recover anytime soon.

On top of concern over a potential second wave of infections, Adachi said that "a number of natural disasters, such as the heavy rains across the country, are worrisome" for consumption.

Sponsored Content

About Sponsored Content This content was commissioned by Nikkei's Global Business Bureau.

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this monthThis is your last free article this month

Stay ahead with our exclusives on Asia;
the most dynamic market in the world.

Stay ahead with our exclusives on Asia

Get trusted insights from experts within Asia itself.

Get trusted insights from experts
within Asia itself.

Try 1 month for $0.99

You have {{numberArticlesLeft}} free article{{numberArticlesLeft-plural}} left this month

This is your last free article this month

Stay ahead with our exclusives on Asia; the most
dynamic market in the world
.

Get trusted insights from experts
within Asia itself.

Try 3 months for $9

Offer ends October 31st

Your trial period has expired

You need a subscription to...

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers and subscribe

Your full access to Nikkei Asia has expired

You need a subscription to:

  • Read all stories with unlimited access
  • Use our mobile and tablet apps
See all offers
NAR on print phone, device, and tablet media

Nikkei Asian Review, now known as Nikkei Asia, will be the voice of the Asian Century.

Celebrate our next chapter
Free access for everyone - Sep. 30

Find out more