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Seiichiro Murakami, newly chosen state minister in charge of industrial revitalization, said the Industrial Revitalization Corp. of Japan will stop accepting new turnaround assignments in March, as scheduled.

“The IRCJ was set up to help banks clean up their bad debt by next year,” Murakami said in an interview. “We will aggressively aid companies that can be turned around in the short time left, but we don’t want to drag our feet past the deadline.”

Set up in 2002, the IRCJ was given three years to bring troubled companies under its wing, and an additional two years to put them back on their feet. It will disband in March 2007.

Murakami praised the IRCJ for its work to date, brushing aside criticism that only 25 companies have turned to the self-proclaimed “hospital for ailing firms” so far.

The IRCJ “created the impetus for Japan’s turnaround activities,” he said. “They showed how it could be done, and now (Japanese) banks and securities firms have joined in.”

Until the arrival of the IRCJ, turnaround expertise was solely in the hands of foreign funds, he said.

Foreign investment funds like U.S.-based Ripplewood Holdings LLC, which bought the failed Long-Term Credit Bank of Japan and launched it as Shinsei Bank, have contributed to Japan’s turnaround activities and are still strong.

Shinsei debuted on the Tokyo Stock Exchange in February, bringing huge profits to Ripplewood.

The most recent of the companies seeking IRCJ help was condominium developer Daikyo Inc., which announced last week it would seek the IRCJ’s help.

Daikyo is the second-biggest case for IRCJ after Kanebo Ltd. Another big company on the horizon is supermarket chain Daiei Inc., which is being pressured by creditors to turn to the government-backed body.

Although Daiei has repeatedly spurned the IRCJ’s help, claiming that it can turn itself around with help from private-sector funds, the IRCJ has already taken the first step and is now assessing Daiei’s assets.

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