Failed moneylender SFCG Co. said Tuesday it has been ordered to scrap its rehabilitation effort and pursue bankruptcy proceedings after being accused of selling the same loans to different financial institutions.
The Tokyo District Court also ordered the company to protect its assets, SFCG said.
SFCG filed for court protection from creditors in February with liabilities totaling about ¥338 billion.
SFCG, formerly known as Shohkoh Fund Co., had hoped to find a sponsor to rebuild itself but was forced to consider liquidation as it faced growing opposition from creditors for a string of troubles over murky loan transactions and a failure to pay back excessive interest overcharges.
"(SFCG) fell behind in its taxes and had its deposits seized, and on top of those, it was found that the firm (sold) the same large amount of loans (to different financial institutions)," Hideo Seto, a lawyer tasked as a preservation administrator, told reporters in Tokyo. "(SFCG) is expected to have its moneylender license revoked in the near future."
The amount of loans SFCG sold to different financial institutions, including Incubator Bank of Japan, totaled around ¥70 billion, Seto said.
Given the court decision, SFCG is expected to enter bankruptcy proceedings in about a month.
SFCG, which mainly loaned money at high interest rates to small and midsize companies, faced deeper cash-flow problems due to the global financial crisis.
SFCG founder Kenshin Oshima has also been accused by a separate group of lawyers of padding accounts to conceal soured debts.
Even before the recent disclosures, the company was riddled with trouble over using coercive means to collect loans. SFCG has yet to repay tens of billions of yen in interest that borrowers had been overcharged under the so-called gray zone rates.