• Kyodo News


Consumer loan company Takefuji Corp. has decided to file for bankruptcy in the face of mounting claims by borrowers for reimbursement of excessive interest charges and thinning profit margins under tightened consumer loan regulations, sources said Monday.

Takefuji President Akira Kiyokawa denied media reports that it would seek court protection from creditors, telling reporters at his home in Yokohama that no decision had been made.

The Tokyo Stock Exchange suspended trading in Takefuji shares, listed on its first section, while it tried to confirm the media reports.

Takefuji has debts totaling ¥430 billion, according to credit research firm Tokyo Shoko Research. The amount is estimated to a lot higher if unclaimed interest reimbursements are added.

Takefuji was the nation’s fourth-biggest consumer lender with ¥589.4 billion in outstanding loans as of the end of March, down from ¥1.7 trillion at the end of March 2002 when it was the biggest such lender.

The company has faced difficulties in raising funds after its credit ratings were cut in the wake of growing interest claims. It had been securing working capital by selling property and other assets.

Takefuji has been trying to turn itself around on its own. According to the sources, it has decided to file with the Tokyo District Court to seek restructuring under the Corporate Rehabilitation Law. It will look for sponsors with the help of the court, they said.

If Takefuji takes the court-aided action, borrowers expecting interest payment reimbursements may see refunds reduced in line with cuts in the company’s repayment obligations such as corporate debts and bank borrowings, subject to its financial standing.

While such a move will reduce Takefuji’s financial burden, it could draw fire from borrowers seeking repayments.

The consumer lending business has faced difficulties since an increasing number of borrowers began claiming refunds for excessive interest charges following a Supreme Court ruling in January 2006.

The ruling invalidated any “gray area” interest charges beyond the interest rate restriction law even if they were levied with the consent of the borrower in line with old provisions of another law on investment deposit and interest rate. It has prompted many borrowers to claim “gray-area” interest.

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