Japanese money lender files for bankruptcy

February 23, 2009
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, TOKYO, Feb 23 – A Japanese corporate money-lender said on Monday it had filed for bankruptcy with liabilities of more than 3.6 billion dollars, blaming growing bad debt and a slump in new loans.

SFCG Co., which filed for protection from creditors with the Tokyo District Court, said it had liabilities of 338.04 billion yen (3.63 billion dollars) as of the end of October.

The collapse of the company, which reportedly owes 71 billion yen to Citigroup, is Japan\’s largest corporate bankruptcy this year, according to private credit research company Teikoku Databank.

"The company suffered extremely severe financial conditions due to a growth of bad loans and a slump in new loans," SFCG said in a statement.

SFCG, established in 1978, grew quickly during the recession of the 1990s by extending high-interest loans to small- and medium-sized businesses that used real estate assets as collateral.

Formerly known as Shoko Fund, it renamed itself after a series of lawsuits were filed against it for its high interest rates and collection methods.

Japan is seeing a rising number of bankruptcies as a result of the global credit crunch and economic downturn.

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