The failure of Pacific Holdings Co., a real estate manager that filed for bankruptcy protection with ¥163.6 billion in liabilities, highlights the funding problems at many firms.

The Financial Services Agency, the nation's financial regulator, in an unprecedented move, said Tuesday it will inspect banks between April and June and may penalize lenders found to have "viciously" cut off borrowers.

Pacific Holdings on Tuesday became the 12th publicly traded firm in Japan to fail this year as the global recession makes creditors wary of lending to smaller companies in favor of major names such as Panasonic Corp. and Mitsubishi UFJ Financial Group Inc. Bankruptcies rose for a ninth month in February.

"Even if the FSA conducts inspections, it might not lead to more lending since it's natural for financial institutions to avoid damaging their capital," said Takeshi Minami, chief economist at Norinchukin Research Institute. "For most small and medium-size companies, the funding situation will stay tough."

Rating and Investment Information Inc. downgraded Pacific Holdings to CCC, or eight levels below investment grade, on Jan. 27, citing concern about the company's ability to raise funds.

The Tokyo-based property manager said Jan. 29 that its debts outweighed assets by ¥5.34 billion as of Nov. 30 and that its auditor declined to sign off on its accounts because a plan to raise ¥47 billion from Chinese real estate firms might fall through.

"The situation became very tough toward the end of the fiscal year after we failed to raise funds," President Wataru Orii said after the company's filing late Tuesday.

Shares of the company, down 87 percent since the start of the year, were untraded Wednesday as sell orders outnumbered buy orders. The shares will be delisted on April 11, according to the Tokyo Stock Exchange's Web site.

The bankruptcy puts Pacific Holdings in default on ¥37 billion in outstanding bonds. The company's liabilities swell to ¥327 billion if debts at its two affiliates are included, Tokyo Shoko Research Ltd. said.

MUFG and Aozora Bank Ltd. are among lenders for Pacific Holdings, according to the company's annual report issued this month.

SFCG Co., a bank focused on lending to small firms, failed last month with ¥338 billion in debt — the biggest bankruptcy by a listed company in almost seven years.