Fujiko Co. applied to the Tokyo District Court on Friday for protection from creditors under the fast-track corporate rehabilitation law, the midsize Japanese contractor said.
Fujiko, which has group liabilities of 83.17 billion yen, is the first listed contractor to go under since JDC Corp. sought court protection under the conventional corporate rehabilitation law in December 1998.
Listed on the first sections of the Tokyo Stock Exchange and the Osaka Securities Exchange, Fujiko has been hit by financial trouble, partly caused by its failure to recover investments in golf courses following the bursting of the asset-inflated economic bubble of the late 1980s.
Fujiko has also suffered the heavy burden of interest payments on bank loans it took out to fund its group companies.
As a result, Fujiko fell into a negative net worth of 12.3 billion yen on a consolidated basis in fiscal 1999, which ended March 31, 2000.
Although Fujiko asked its main bank, Sakura Bank, to forgive its loans, negotiations ended in stalemate, forcing the company to seek court-mandated rehabilitation.
While the fast-track rehabilitation law is designed to help a troubled company jump-start reconstruction efforts, Fujiko said it expects support from Software Industrial Co. and Sanyu Construction Co. and will come up with a court-guided rehabilitation program soon.
In addition, Sakura Bank is expected to continue its financial support, the Tokyo-based contractor said.
Speculation had been swirling in recent weeks that Sakura Bank might turn its back on Fujiko; the bank was thought to be poised to accelerate disposal of problem loans ahead of its merger with Sumitomo Bank in April.
As a result, confidence in Fujiko’s solvency has deteriorated dramatically, with some subcontractors refusing to do business with the firm, according to industry sources.
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