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Japanese Builder Files Bankruptcy

Contractor: Nissan Construction abandons restructuring plans and applies for protection from creditors.

April 01, 2002|From Associated Press

TOKYO — Japan's Nissan Construction Co. applied for bankruptcy protection from its creditors, abandoning plans to rehabilitate itself financially.

The company, listed on the Tokyo Stock Exchange, has liabilities amounting to about $865 million, Nissan Construction President Takeshi Fujita told reporters Sunday.

"We explored the possibility of revival through a corporate tie-up, but our financial position was too weak," said Fujita, who resigned Sunday along with the company's eight other directors.

Nissan Construction, 48% owned by failed supermarket operator Mycal, has close business relations with heavy machinery and engineering company Hitachi Zosen Corp. as well as Nissan Motor Co.

Mycal, Japan's fourth-biggest supermarket chain, filed for court protection from creditors in September after its main bank cut off funding.

Mycal's failure hit Nissan Construction hard because the supermarket operator had owed the builder about $90million, Fujita said.

The Nissan Construction bankruptcy filing is the second in a month by a Japanese construction company. In early March, builder Sato Kogyo filed for court protection, with debts estimated at $3.76billion.

Public fears have been growing over high-profile bankruptcies. Last year, construction company Aoki Corp. went under. In January, home builder Shokusan Jutaku Sogo Co. filed for protection from creditors.

Many builders have suffered a decline in orders since Prime Minister Junichiro Koizumi swept to power vowing to end pork barrel spending on highways and other construction projects. Spending under previous leaders had made Japan's debt the highest in the industrialized world at about $5.4 trillion, equivalent to 130% of gross domestic product.

Nissan Construction announced a restructuring plan in May followed by another in November, but falling demand combined with a freeze on many public works projects forced it to file for bankruptcy, it said.

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