Trading house Itochu said Wednesday that it has signed a contract to provide turnaround support to Bigmotor, a used car dealer struggling due to an insurance claims fraud scandal.
Itochu is considering investing ¥20 billion in a new company to be set up as early as late April to take over Bigmotor's key assets such as stores and repair shops.
Bigmotor's founding family will focus on dealing with the scandal, and will not be involved in the management of the new company.
The new firm will be launched jointly by Itochu, subsidiary Itochu Enex and investment fund J-Will Partners.
The three companies found after a due diligence process that Bigmotor's reconstruction would be possible and meaningful, Itochu said.
Itochu runs a wide range of automobile-related businesses, including sales of luxury imported cars and automobile insurance, and hopes to create synergy effects with Bigmotor's used car operations.
Bigmotor has been losing customers since some of its outlets forfeited designations as private automobile inspection centers and registration as a nonlife insurance agency due to the insurance claims fraud scandal.