Condominium developer Japan General Estate Co. has effectively folded with liabilities of about ¥197.55 billion brought on by the global financial turmoil and the deepening slump in the real estate industry.
The Tokyo-based company, listed on the first section of the Tokyo Stock Exchange, announced Thursday that the Tokyo District Court accepted its request bankruptcy protection the same day.
According to private credit research agency Teikoku Databank, the failure is likely the biggest bankruptcy of a listed firm this year and second in scale in terms of debts. Property developer Urban Corp. went under with liabilities of ¥255.83 billion last summer.
Japan General Estate was recently criticized for withdrawing job offers to 53 students in November and had agreed to pay them ¥1 million each in compensation.
The company said it has already paid the students.
While the company logged record profits in fiscal 2007 on steady sales of mainly family-type condominiums, it said earnings were eroded by tighter building regulations and deterioration in the real estate market triggered by the U.S. subprime-mortgage crisis.
"Turmoil in financial markets and a downturn in the real estate industry showed no signs of abating, and we faced grave financial difficulties starting from last August, especially since October," the company said in a statement.
The TSE said it will delist Japan General Estate on March 6.
In fiscal 2007, which ended last March 31, Japan General Estate booked a consolidated net profit of ¥4.6 billion on sales of ¥118.9 billion. It had a groupwide workforce of 650 as of the end of September.
Japanese real estate companies have been going under in droves as demand for condominiums and other properties dwindles amid the global economic downturn.
