• Kyodo

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Court-mandated rehabilitation procedures were approved Thursday for Morimoto Corp.

The midsize construction firm said it will present a rehabilitation plan by Jan. 21 to the Osaka District Court while seeking a sponsor firm in consultation with its main creditor, Sumitomo Mitsui Banking Corp.

Morimoto filed for court protection from creditors Oct. 1 in the biggest failure of a listed firm so far this year.

The Osaka-based builder took the legal step with the Osaka District Court under the fast-track Civil Rehabilitation Law, with 215.3 billion yen in liabilities.

Of that sum, Morimoto owes about 80 billion yen to Sumitomo Mitsui Banking, a core unit of Sumitomo Mitsui Financial Group Inc., the company said.

Established in 1890, Morimoto is listed on the first section of the Osaka Securities Exchange and has about 1,000 employees.

Morimoto was once a major construction company for government and public agencies. But the economic slump and intensified competition have reduced orders and eaten away at its profitability.

In the business year that ended March 31, Morimoto posted a group net profit of 100 million yen on sales of 121.8 billion yen, but it also had interest-bearing debts exceeding 100 billion yen and interest payments were a heavy burden on the firm.

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