The Industrial Revitalization Corp. of Japan announced Friday that it will bail out Matsuya Denki Co., an Osaka home appliances retailer, and Meisei and Co., a chemical trading company also based in Osaka, under its corporate resuscitation scheme.

The announcement means the state-backed revival body now has six rehabilitation cases.

The announcement comes a month after the IRCJ announced its first batch of rescue targets, including a Kyushu bus operator and a Fukushima department store.

On Thursday, Matsuya Denki, a struggling home appliance chain with 305 outlets, mainly in the Kansai region, filed for court protection from creditors under the civil rehabilitation law.

It is the first case in which the IRCJ has sought to salvage a company going through legal bankruptcy procedures.

Shinjiro Takagi, chairman of the Industrial Revitalization Committee, said the Matsuya Denki case is a model of early corporate revitalization.

In Japan, fear of being stigmatized often keeps companies from filing for bankruptcy at an early stage. When they finally do turn to the courts, it’s too late and they end up delivering themselves into the very fate they had hoped to avoid.

By throwing its support behind Matsuya Denki, the IRCJ hopes to create an environment in which banks feel more confident in offering loans to businesses undergoing rehabilitation, the IRCJ officials said.

These loans, termed debtor-in-possession financing (DIP), are still very rare in Japan, where lenders have little knowhow in this high-risk area of finance.

Matsuya Denki’s creditors, led by the effectively nationalized Resona Bank, will cough up a total of 41.8 billion yen in losses from debt waivers, the IRCJ said.

Meanwhile, Meisei and Co., a trader specializing in chemicals, logged sales of 58 billion yen in fiscal 2002 but suffered under the weight of 4.5 billion yen in stock trading losses from the late 1980s bubble era.

The IRCJ is asking the firm’s creditors, including Sumitomo Mitsui Banking Corp., to waive 5.5 billion yen in outstanding loans to Meisei.

The IRCJ will cut the firm’s capital by 68 million yen — or 85 percent of its total capital — to hold shareholders accountable.

The IRCJ or a future sponsor will then inject 500 million yen in fresh capital into the firm, the officials said.

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