The former chairman of failed department store chain Sogo Co. was handed a court order Tuesday to pay some 12.7 billion yen to Mizuho Corporate Bank in his capacity as a guarantor for a loan extended to a Sogo outlet that later turned sour.

The Tokyo District Court said Hiroo Mizushima, 91, should repay the loan, as well as additional money for delinquent payment for a loan extended by the bank, which was then known as the Industrial Bank of Japan, to Sogo’s Kinshicho branch in Sumida Ward, Tokyo.

During the trial, Mizushima’s lawyers argued that he had agreed to act as guarantor, having been told by IBJ officials that the contract was only a formality and that he would not be held responsible for the loan.

As such, the contract was void, they said.

But presiding Judge Hitomi Akiyoshi rejected this argument, saying it was “unnatural” for a person who had long served at the top level of management at the Sogo group and was well-versed in legal matters to fail to draw up paperwork clarifying that the contract was only ceremonial.

According to the ruling, Mizushima and IBJ signed a contract in 1995 in which the former agreed to act as a joint surety for loans of up to 11 billion yen extended to Kinshicho Sogo. IBJ extended some 13.6 billion yen to the department store in June 2000.

Also Tuesday, the judge nullified a contract in which Mizushima sold some real estate to his brother-in-law just before Sogo went belly up.

The judge said the transaction constituted the hiding of assets.

Mizushima is currently on trial for allegedly hiding some 150 million yen in personal assets from creditors such as IBJ around the time of Sogo’s collapse in July 2000.

Sogo emerged from bankruptcy and is now part of Millennium Retailing Inc., a holding company born through the integration of Sogo and Seibu Department Stores Ltd.

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