Okura & Co. became the nation's third-largest corporate failure in 1998 on Friday as the Tokyo District Court declared the venerable institution bankrupt with 288.3 billion yen in group liabilities.
The medium-size trading house, listed on the Tokyo Stock Exchange's first section, filed for bankruptcy earlier in the day and is the core company of the former Okura zaibatsu. Following the failures of Daido Concrete Co., Mitsui Wharf Co., and Asakawagumi Co., the court's declaration makes Okura the fourth listed Japanese firm to go belly up this year.
At a press conference, Okura President Yoshihiko Okura blamed the firm's demise on the massive real estate investments made during the late 1980s asset bubble, which later burst, leaving heaps of nonperforming assets in its place. He also cited fatal fundraising difficulties with banks.
"I feel like I'm having a nightmare that has ended in the worst way," he said, relating the refusal by main bank Fuji Bank to extend it loans.
Fuji sealed the fate of the 125-year-old trading house by making a request for repayment on Okura's outstanding loans.
On a net basis, Okura has been losing money for the last six business years. The trader had nonperforming assets of 98 billion yen for the year that ended March 31, Okura said.
The failure of Okura could cause negative effects on former Okura group companies, such as Taisei Corp., Chiyoda Mutual Life Insurance Co. and Hotel Okura Co.