Real estate developer EIE International Corp. and its affiliate General Lease Co. have been declared bankrupt by the Tokyo District Court, a private credit research agency said Wednesday.
Teikoku Databank Ltd. estimates the combined debt of the companies at 600.9 billion yen — 476.4 billion yen held by EIE International and 124.5 billion yen by General Lease.
The court declared bankruptcy for the two firms last Friday, Teikoku said.
Resolution and Collection Corp., a state-run debt collecting agency, filed bankruptcy proceedings with the court on behalf of the two companies in late May.
EIE International was the third-largest firm in terms of liabilities to go under this year. Folding with larger debts were consumer credit firm Life Co., which became insolvent in May with 966.3 billion yen in debts, and property developer Nihon Building Project Co., which went bankrupt earlier this month with debts of 560 billion yen.
EIE International, established in 1972, aggressively invested in real estate during the bubble years. It borrowed heavily from nonbank financiers and the Long-Term Credit Bank of Japan — now called Shinsei Bank — which was the firm’s primary lender.
When the speculative bubble burst, EIE International was saddled with massive debts. As a result, General Lease, which has close ties with EIE International, fell into financial difficulties.
Earlier this year, the LTCB requested that the RCC file bankruptcy proceedings on behalf of the two companies.
Several of the LTCB’s borrowers have become insolvent.
The LTCB, which failed in 1998 and was brought under state control, was bought March 1 by an international financial consortium led by U.S. investment fund Ripplewood Holdings LLC.
EIE was headed by Harunori Takahashi, the former president of Tokyo Kyowa Credit Association.
The credit association, together with Anzen Credit Bank, collapsed under the weight of bad loans amassed under Takahashi’s lax lending policies and illegal lending operations.
The operations of the two credit unions were taken over in March 1995 by Tokyo Kyodo Bank.
In October 1999, Takahashi was sentenced by the Tokyo District Court to 41/2 years in prison for causing losses worth 22 billion yen to the credit unions.