Tokyo, June 14 (Bloomberg) -- Japanese bankruptcies rose for the ninth straight month in May as banks pulled the plug on Tokyo- based fashion house Hanae Mori International Co., papermaker Nippon Kakoh Seishi Co., and 1,728 other companies. Failures in the world's second-biggest economy rose 3.9 percent from a year ago, credit researcher Tokyo Shoko Research Ltd. said. The bankrupt companies owed 1.34 trillion yen ($10.7 billion). This year, 21 publicly traded companies have gone bust, breaking last year's record of 14. Signs that rising exports are pulling Japan out of recession have come too late for companies hurt by nine years of sliding consumer spending and last year's manufacturing slump. Japan's seven- largest banks are shouldering 26.8 trillion yen in non-performing loans, making them unwilling to lend more. ``There are still hundreds of thousands of companies that can't get credit and are facing failure,'' said Hirotake Araya, a general manager at Tokyo Shoko Research. ``A recovery in exports of cars and electronics won't help that.'' Nippon Kakoh, which makes art and coated papers, failed last month after falling demand for computers and mobile phones last year hurt orders for paper used in instruction manuals, adding to a sales slump that contributed to a five-year losing streak. The Tokyo-based company owed 83.1 billion yen in liabilities.

Sales Slump
A five-year sales slump as consumers turned to cheaper brands or bought from rivals Hermes International SA and Gucci Group NV helped send Hanae Mori into bankruptcy last month. The Tokyo-based fashion house had also expanded into restaurants and other unrelated business that failed to prosper during Japan's decade-long slump, adding to debt that totaled 10.1 billion yen at bankruptcy. Other high-profile companies to go bust last month included Kawana Hotel. The site of a 1998 summit meeting between then Prime Minister Ryutaro Hashimoto and former Russian President Boris Yeltsin, Kawana Hotel went bust after three recessions in a decade ate into fees earned from memberships at its golf courses. Overall 8,299 companies failed in the first five months at a rate of 55 a day, just shy of the 1984 pace when a record 20,841 companies failed in the year. Bankruptcies at construction companies, which employ one in ten Japanese, rose 549, their highest level this year, leaving 118 billion yen in liabilities. The number of bankrupt manufacturers rose a ninth straight month from year ago levels to 347, leaving 179.2 billion yen in liabilities. Failures at wholesalers rose to 286 cases.