Nissan Construction Co., affiliated with collapsed retailer Mycal Corp., has filed for protection from creditors.
The firm said Sunday it filed for protection the previous night with the Tokyo District Court under the Corporate Rehabilitation Law.
The Tokyo-based midsize general contractor has had considerable difficulty in collecting some 12 billion yen from the Mycal group for work it has completed. The retailer, which owned nearly half of Nissan Construction, went under in September.
Nissan Construction has also suffered a decline in orders because many of its customers took their business elsewhere after Mycal went under.
For the business year ending this March, the firm expects to post a net loss of 24.6 billion yen and a capital deficit of 10.9 billion yen, and said it has total liabilities of 114.6 billion yen on a consolidated basis.
All nine of its board members, including President Takeshi Fujita, stepped down as of Saturday, the company said.
At a news conference in Tokyo on Sunday, Fujita said the company’s reconstruction plans were “not rigorous enough” and that the situation the company faced after Mycal collapsed was “more severe than we thought it would be.”
Fujita said that annual sales for the current fiscal year is now projected to fall by 23 percent from the previous year, to 108.9 billion yen.
The net losses include 12 billion yen in uncollectible credit to supermarket operator Mycal Corp., which remains Nissan Construction’s largest shareholder with a 48.16 percent stake.
Operating losses will be 2.8 billion yen, pretax losses 4.1 billion yen and net losses 24.6 billion yen for fiscal 2001, the company said.
The failure of Mycal Corp., together with the falling stock price of Nissan Construction, critically damaged corporate credit, Fujita explained.
As a result, orders drastically decreased while purchasing costs of construction materials significantly increased, officials of the company said.
Values of orders that Nissan Construction won were only 4.4 billion yen in January and 4.3 billion yen in February, both about half of that of the same months last year, the company officials said.
But Vice President Hiroshi Tsutsui denied speculations that Nissan Construction’s failure was triggered by creditor banks, which are now desperately getting rid of problem loans.
Daiichi Kangyo Bank, the main creditor bank that extended loans estimated at 35 billion yen to Nissan Construction in total, has provided sufficient operating funds to the company, Tsutsui claimed.
The Nissan Construction’s history dates back to a forerunner that belonged to the Nissan zaibatsu group of the prewar era, although it currently has no capital ties with Nissan Motor Co.
Meanwhile, the Tokyo Stock Exchange decided Sunday to delist Nissan Construction from the first section on July 1.
In another development, failed contractor Sato Kogyo Co. said Sunday it has obtained approval from the Tokyo District Court to start proceedings for its business rehabilitation.
Sato Kogyo is due to submit a rehabilitation plan by the end of March 2003.
Sato Kogyo filed for court protection from creditors under the Corporate Rehabilitation Law on March 3, being saddled with liabilities totaling 449.9 billion yen.
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