Japan’s bankruptcy cases hit 12-year high in 2025

Japan saw about 10,300 corporate bankruptcies in 2025, the highest annual level in 12 years and the fourth straight yearly increase. The rise was modestly higher than 2024 (up 2.9% year on year) but still signals mounting pressure on especially smaller firms.​

Key figures

• Corporate bankruptcies (liabilities of at least 10 million yen) reached 10,300 in 2025, the highest since 2013.​

• This was the second consecutive year with more than 10,000 cases and marked a 2.9% increase from 2024, after a much sharper 15.1% jump the year before.​

• Around three quarters of the cases were small-scale bankruptcies, underscoring the vulnerability of smaller and medium-sized businesses.​

Main causes

• Inflation and higher input costs, including more expensive imported goods due to a weak yen, squeezed profit margins.​

• Persistent labor shortages pushed up wage and hiring costs, and bankruptcies directly attributed to labor shortages hit a record 397 cases.​

• Many smaller firms struggled to pass on rising costs to customers or match wages offered by larger companies, leading to closures.​

Sector impact

• Service industries (including restaurants) saw the most bankruptcies, with roughly 3,500 cases and mid–single digit percentage growth from the prior year.​

• Construction and manufacturing also recorded notable increases, each with around 2,000 and 1,200 cases respectively, reflecting the burden of higher materials and operating costs.​

Outlook

• Credit research firms expect bankruptcies to moderately increase further in 2026, citing rising interest rates, continued cost pressures, and external risks such as U.S. tariffs and strained Japan–China relations.​

• With the yen still weak and prices elevated, financially weaker companies may face additional stress as borrowing costs and trade frictions intensify.​