Bankruptcies Due to Unpaid Social Insurance and Taxes Reached 221 in FY2025, 2nd Highest Level. Almost All Cases Result in 'Bankruptcy', Highlighting the Difficulty of Restructuring After Delinquency

Teikoku Databank investigated and analyzed corporate bankruptcies (bankruptcies due to delinquency of public dues and taxes) where companies went bankrupt after their assets were seized because they were unable to pay or continued to fall behind on various 'taxes (public taxes)' such as consumption tax and fixed asset tax, and 'social insurance premiums (public dues)' such as welfare pension insurance and health insurance.

SUMMARY
The number of 'public dues delinquency type' bankruptcies that occurred in FY2025 was 221. Although it decreased from the previous year, it remained at the second highest level in the past 10 years (the highest was 269 in FY2024). Almost all cases resulted in 'bankruptcy', highlighting the current situation where once a company falls behind on 'public dues', it becomes a major obstacle to subsequent management restructuring.

Aggregation period: April 1, 2016 to March 31, 2025
Aggregation target: Bankruptcies through legal liquidation with liabilities of 10 million yen or more. Prior to FY2024, it includes newly discovered bankruptcy cases based on the latest information.

Bankruptcies due to unpaid social insurance and taxes, 221 cases in FY2025
Corporate bankruptcies triggered by the delinquency of 'public dues' such as social insurance premiums and taxes ('public dues' delinquency bankruptcies, liabilities of 10 million yen or more) occurred in 221 cases in FY2025. Although it decreased by 48 cases (17.8%) from the previous year (269 cases), it remained at the second highest level in the past 10 years. Among these, looking at the type of bankruptcy, 97% (215 cases) of the 221 cases that occurred in FY2025 were 'bankruptcies'.

Unlike rescheduling with financial institutions, 'delinquency of public dues' aimed at securing cash on hand results in the forced seizure of accounts receivable and business accounts. If a seizure occurs, loans from financial institutions and others lose the benefit of time, cash flow tends to deteriorate significantly, and it becomes a major obstacle to subsequent management restructuring.

Looking at bankruptcies due to delinquency of public dues in FY2025 by industry, 'Construction' was the most common with 62 cases. This was followed by 'Services' (60 cases) including software development, and 'Transportation and Communication' (26 cases) such as truck transportation. Although the number decreased from the previous year in many industries, bankruptcies were prominent in the construction and transportation industries, which were forced to suspend operations due to unpaid social insurance premiums and taxes as they could not pass on soaring material and fuel costs to clients, resulting in a decrease in cash on hand.

In the construction industry, the higher the dependence on construction work from the client, the lower the profit margin. Many companies suffered from deteriorating profitability as they could not pass on soaring material costs and were unable to raise the funds to pay delinquent public dues. In addition, there were many cases where 'enrollment and full payment of social insurance' was required as a condition for bidding on government agency projects or receiving orders from major general contractors, and companies lost their qualifications to receive orders due to unpaid social insurance premiums, leading to business failure. In the transportation industry, in addition to soaring fuel costs, rising personnel and outsourcing costs to secure and retain drivers in a highly competitive hiring market pressured profits. Companies were forced to fall behind on social insurance premiums and consumption taxes to secure cash, and seizures by tax authorities stopped salary payments, leading to many cases where businesses could not continue as they were.