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ECONOMY

Corporate shutdowns, closures hitting new record amid declining bankruptcies

  • January 14, 2017
  • , Nikkei , p. 5
  • JMH Translation

The number of businesses that were shut down, closed, or dissolved in 2016 is projected to top a record 29,500 and increase for the first time in three years. More companies are choosing to discontinue operations before they go into trouble due to bleak prospects, such as difficulty in finding successors and personnel shortages. The number is not reflected in the statistics on “corporate bankruptcies,” which marked its the eighth straight year of decline since 2009, but highlights the predicaments faced by owners of smaller firms.

 

According to Tokyo Shoko Research, the number of corporate shutdowns, closures, and dissolutions is projected to grow by about 3,000 compared to a year ago. Meanwhile, the number of corporate bankruptcies that the private think tank tallied nationwide fell 4% on the year to 8,446 and declined for the eight straight years.  

 

The number of corporate shutdowns, closures and dissolutions is forecast to surpass the previous record of 29,351 in 2013 and top 29,500. The number is especially high in construction and other sectors that are facing serious personnel shortages. Many of these firms are not saddled with excessive debts, but are choosing to close before they run into difficulties because they cannot find successors. (Abridged)

 

Note: Tokyo Shoko Research defines shutdowns and closures as the discontinuation of operation when assets exceed liabilities. Dissolution is when companies go into liquidation with excess assets. It is categorized differently from bankruptcy.

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