Japan Hit by Wave of Bankruptcies

The wave of corporate bankruptcies in Japan is becoming increasingly alarming. A total of 1,028 companies went under throughout July 2026, with total liabilities reaching 236.3 billion yen, or approximately Rp 26.22 trillion.

The number of bankruptcies jumped 6.9% compared with July of the previous year. The bankruptcy figure also exceeded 1,000 companies for two consecutive months.

The situation occurred as small businesses in Japan continued to be squeezed by labour shortages and rising prices.

Throughout July 2026, bankruptcies caused by labour shortages reached a record high of 63 cases. Of that number, 36 cases were triggered by personnel costs doubling compared with the previous year.

“Wage increases are unavoidable to secure workers, but companies are worsening their cash flow by raising wages beyond their means when they are unable to generate sufficient revenue,” said an official from corporate credit research firm Teikoku Databank Ltd.

Meanwhile, bankruptcies caused by rising prices also increased to 93 cases. Most of the increase was a prolonged consequence of the weakening yen.

The figure of 93 cases was the highest since 2022. Cost pressures are making it increasingly difficult for small companies to maintain their cash flow.

In addition to cost and labour pressures, the bankruptcy of Osaka-based credit card transaction system provider Zentoshin was cited as another factor driving many businesses into insolvency.

Many MSMEs, particularly small restaurants and retailers, relied heavily on the company’s payment services. Small business owners have very limited cash flow flexibility and depend on early payments.

“The company, which primarily provides quick settlement services for credit card sales to restaurants and other merchants, filed for bankruptcy in July with liabilities of 115.16 billion yen, making it likely the largest bankruptcy in the country so far this year,” Teikoku Databank explained.

Under these conditions, the total liabilities of companies that went bankrupt throughout July 2026 reached 236.3 billion yen, or approximately Rp 26.22 trillion (assuming an exchange rate of Rp 111 per Japanese yen). The liability value jumped 41.4% year-on-year.