The Tokyo District Court on Thursday rejected a demand by former Sogo Co. Chairman Hiroo Mizushima that Sogo and its creditor, Industrial Bank of Japan, return shares of stock he voluntarily gave to the firm free of charge.
Presiding Judge Hisaki Kobayashi dismissed Mizushima’s claim because the company’s court-sponsored rehabilitation plan, which was agreed to in February, reduced its capital and wiped out the shares.
Kobayashi also said that Mizushima, 89, is no longer a Sogo shareholder regardless of the validity of the stock transfer.
Mizushima transferred 520,000 Sogo shares and its Chiba Prefecture outlet to the corporate body in April 2000 on the condition that the store go through a self-revival plan in which banks would waive their debts to the failed chain.
But Sogo was forced to seek court-sponsored rehabilitation after public outrage broke out over the use of taxpayer money for the plan. The company filed for protection from creditors in July.
According to the court, Mizushima donated the shares to Sogo on April 26, 2000, to enable it to seek restructuring on its own. The stocks were later transferred to IBJ.
During litigation, Mizushima maintained that he is still a major stockholder of Osaka-based Sogo and its retail outlet in Chiba. He argued that the court-mandated restructuring plan is illegal and invalid.
Sogo and IBJ, however, said Mizushima “unconditionally” handed over the stocks and that the deal was “definitive,” insisting the stock transfer would not be influenced by a bank debt waiver and Sogo’s self-revival plan.
The defendants said the former chairman’s demand has become meaningless because the stocks he wants to retrieve vanished in the court-sponsored rehabilitation plan.
Mizushima was arrested in a hospital last Friday on suspicion of concealing personal assets to avoid court-ordered seizure by IBJ and other creditors.
IBJ is now a unit of Mizuho Holdings Inc.
Sogo Inc. is being rehabilitated under the wing of Seibu Department Stores Ltd.
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