Following weeks of tortuous bailout talks that put the notion of corporate governance to shame, the government's Industrial Revitalization Corp., or IRC, last week unveiled a huge rescue package for Kanebo Ltd., the troubled cosmetics firm that has looked like a rudderless ship all the while. What lies ahead is a hard battle to revive a corporation in which hundreds of billions of yen in taxpayer money is at stake.
The bailout plan calls for the creation of a new company to succeed the profitable cosmetics division. This is intended to make things easier for the rump Kanebo -- an assemblage of underperforming operations, including textile and food divisions. A broader revival program involving all Kanebo operations is expected to be completed by mid-May.
The immediate task for the IRC is to assess Kanebo's assets, excluding those of the cosmetics division, by rational and rigorous standards. That will likely entail a further restructuring of noncompetitive operations. The need for reform also demands that both Kanebo management and creditor banks shake off any sense of complacency that may have contributed to the failure of the nation's second-largest cosmetics company.