The Tokyo High Court on Wednesday upheld a lower court ruling ordering the former chairman of department store chain Sogo Co. to pay 12.8 billion yen to Mizuho Corporate Bank as guarantor for a loan extended to a Sogo outlet that turned sour.
Hiroo Mizushima, 92, signed a contract in September 1995 with Industrial Bank of Japan, which later merged to form Mizuho Corporate Bank, agreeing to act as a joint surety.
The contract, extended in 1999 and 2001, specifies that Mizushima personally guaranteed payment of up to 11 billion yen of the 13.6 billion yen loan extended by IBJ to Sogo’s Kinshicho branch in Tokyo’s Sumida Ward.
The 12.8 billion yen Mizushima has been ordered to pay includes interest on the 11 billion yen he guaranteed.
Presiding Judge Nobuo Akatsuka of the high court dismissed Mizushima’s appeal against a Tokyo District Court ruling issued in October.
The judge also upheld a district court decision to nullify a contract in which Mizushima sold real estate in Tokyo’s Setagaya Ward to his brother-in-law in June 2000, half a month before Sogo’s collapse, saying this action was an attempt to escape seizure of the assets.
The Sogo group filed for court-authorized rehabilitation with 1.87 trillion yen in debts on July 11, 2000, and the Kinshicho branch was closed in December 2000.
The emporium chain has since been rehabilitated.
Throughout the trial, Mizushima’s defense team argued that the contract naming him as guarantor was void, claiming he had signed it only after being told by an IBJ official that it was a mere formality and he would never be liable for the loan.
The court dismissed this argument and concluded that even if that was the case, Mizushima, who was well-versed in legal matters and even gave law lectures at Chuo University, should have drawn up documents clarifying the fact that the contract was merely ceremonial.
Mizushima has also been tried in several other cases related to Sogo’s collapse.
In December, the Tokyo District Court ordered him to pay 9 billion yen to Deposit Insurance Corp., which took over loans to Sogo from Shinsei Bank, formerly Long-Term Credit Bank of Japan.