Nisseki House crumbles into bankruptcy

Midsize house maker Nisseki House Industry Co. filed for protection from creditors at the Tokyo District Court on Wednesday, the company said. Its top shareholder, Kotobuki Industry Co., which owns about 17 percent of the company, did the same.

Nisseki House’s liabilities stood at 17.5 billion yen as of Sept. 30. Teikoku Databank Ltd., a credit research agency, said the combined debts of Nisseki House and Kotobuki came to 36.1 billion yen.

The house maker has drawn scrutiny since six years ago, when its founder and then-president disappeared. He remains listed as missing.

The company, listed on the first section of the Tokyo Stock Exchange, said it filed for protection with the Tokyo District Court under the fast-track civil rehabilitation law because it could not make payments to creditors that are due at the end of this month.

Kotobuki is a construction material seller listed on the second section of the Osaka Securities Exchange. It developed a negative net worth of 4.4 billion yen as of March 31.

Nisseki House became the second listed house builder to file for protection under the same law this year. Shokusan Jutaku Sogo Co., a builder of custom-made houses, invoked the law Jan. 13 with unconsolidated debts of 13.5 billion yen.

The steel-frame prefabricated-house builder said it incurred a massive debt from aggressive capital investments into its plants, which turned sour amid the housing slump, the officials said.

Mizuho Corporate Bank, one of the two cores of Mizuho Holdings Inc. and the main bank of the two troubled firms, severed credit lines to the two, which have taken a pounding from the decelerating economy.

With the Japanese banking system under pressure to speed up the disposal of bad loans, other banks are likely to come under heavier pressure to sever credit lines to other heavily indebted housing, real-estate and construction firms.

Nisseki House said its operations would be sold to a Nagoya-based company, with the details of the deal yet to be ironed out.