A new three-year restructuring program for Daiei Inc., the nation's second-largest supermarket chain operator, is symbolic of the debt woes that plague large Japanese distributors, constructors and real estate firms. Earlier this month, Daiei's three creditor banks -- UFJ Holdings Inc., Sumitomo Mitsui Banking Corp. and Fuji Bank -- agreed to provide Daiei with 420 billion yen in financial assistance. At the same time, the retailer will retire half its common stock and reduce its interest-bearing group debt of 1.75 trillion yen (excluding debt owed by its finance subsidiary) to under 1 trillion yen in the next three years.

The program represents a joint effort by the parties directly concerned -- management, banks and shareholders -- to rehabilitate the ailing company. But it pales in comparison with the size of the debt. Cutting the burden in half over three years is a major operation, but doing so will still leave Daiei nearly 1 trillion yen in debt three years from now -- a sum that far exceeds the group's estimated earnings. More drastic action may be needed to wipe out the debt. As things stand, Daiei's future remains uncertain at best.

The inadequacy of the restructuring program seems to reflect in large part the predicament of the creditor banks themselves. The impression is that, plagued by huge bad debts themselves, they chose to play it safe. It is said, in fact, that instead of working out sure-fire restructuring measures, they cobbled together a package of halfway compromises. If that is the case, Daiei may not be able to get back on its feet.