Japan's lender Takefuji files for bankruptcy protection (Roundup)

Sep 28, 2010, 15:01 GMT

Tokyo - Japanese lender Takefuji Corp filed for bankruptcy protection Tuesday as the consumer finance firm was burdened by mounting claims for reimbursement of excessive interest charges, the company said.

Takefuji listed overall debts of 433.61 billion yen (5.16 billion dollars) as of the end of June. However, more than 2 million borrowers have yet to claim reimbursements and Takefuji could face an estimated 1 to 2 trillion yen in further claims.

But the company is expected to have the total amount of its reimbursement obligations reduced and to seek a sponsor under the court-backed rehabilitation.

Takefuji, once the nation's biggest lender with outstanding loans of around 1.77 trillion yen as of March 2002, had fallen to fourth largest by March this year with the total of its loans shrinking to 589.4 billion yen, Kyodo News reported.

Takefuji's operations have deteriorated since a 2006 Supreme Court ruling invalidated 'grey area' interest charges beyond those defined by the interest rate restriction law, which led to increased claims from borrowers for reimbursement of such charges, Kyodo said.

Takefuji announced Tuesday that company president Akira Kiyokawa and vice president Taketeru Takei, a son of founder Yasuo Takei, had resigned from their posts. Director Junichi Yoshida took over as president.

'We offer our most sincere apology to creditors and those who supported us for causing them so much trouble,' Yoshida said.

The Tokyo Stock Exchange said that it was to delist shares of Takefuji on October 29.

The company will need to significantly reduce its workforce from the current total of around 2,000 and close many of its 540 outlets, including unmanned operations, Kyodo reported.

In 1996, Yasuo Takei established Fuji Shoji, a forerunner of Takefuji, in downtown Tokyo. His business expanded as Takei made unsecured loans through its countrywide offices called 'Yen Shop' and automated machines. He worked his way up to the top in Japan's consumer loan business and became one of the country's richest men.

Takei resigned as chairman in December 2003 after he was arrested for placing wiretaps on journalists' phones, for which he received a suspended prison term of three years. He died in 2006.