The government on Sunday said it would act to prevent a chain reaction of bankruptcies after midsize general contractor Sato Kogyo Co. filed for protection from creditors earlier in the day, the second midsize builder to collapse in three months.
"General contractors affect a broad range of firms including many small and midsize businesses," Economy, Trade and Industry Minister Takeo Hiranuma said. "We would like to take a meticulous approach by building safety networks" to deal with the consequences.
Satoshi Iwamura, director general of the Policy Bureau of the Land, Infrastructure and Transport Ministry, said the possibility of chain-reaction bankruptcies in the construction industry is a well-known problem.