Real estate developer Seiyo Corp. filed for liquidation Tuesday with the Tokyo District Court, collapsing under group debts estimated at 550 billion yen.
Seiyo's group liabilities exceeded assets by 460 billion yen at the end of March, primarily due to failed real estate investments it had made during the bubble economy of the late 1980s.
Seiyo belongs to the Saison group, which also includes Seibu Department Stores Ltd., Seiyu Ltd., Credit Saison Co., Seiyo Food Systems Inc. and Parco Co.
Dai-Ichi Kangyo Bank and other major creditor banks are expected to waive more than 300 billion yen in claims on loans to Seiyo, while Seibu Department Stores is to sell its flagship store in Tokyo's Ikebukuro district and some of its own shares to help repay about 50 billion yen Seiyo owes to creditors.
Seiji Tsutsumi, founder of the Saison group, was the main mover behind Seiyo's expansionist business strategy. He has promised to contribute 10 billion yen of his own funds toward Seiyo's debts.
But Tsutsumi's influence in Saison is likely to weaken because he is apparently selling part of his stock holdings in the group to raise the money.
Tokyo-based Seiyo, launched as a housing developer, invested aggressively under Tsutsumi's direction in expensive resort projects during the bubble years. Most of them failed with the bubble's collapse.
Some of the company's bank debts were forgiven along with a moratorium on interest rates under a restructuring plan compiled in 1995. The company, however, failed to turn itself round.