Japanese home builder folds

By Alex Frew McMillan
CNN Hong Kong

(CNN) -- Home builder Shokusan Jutaku Sogo Co. has joined the lengthening line of public companies looking for help from creditors.

Shokusan filed for protection from lenders in Tokyo District Court on its 13.5 billion yen ($102.1 million) debts.

Last year, 14 public companies went under, as banks begin to get tougher with problem borrowers. They included midsize general contractor Aoki Corp., which collapsed in December.

Shokusan decided to look for protection after an extraordinary meeting of its board on Sunday. But it blamed its decision on Japan's economic woes.

"We were forced to make the decision that if we went on in this way in the worsening economic climate, our debts would only deepen still further, causing great trouble for our clients and supporters," the company wrote in a statement.

"In order to complete projects already under way, it is with regret that we decided to abandon our own restructuring efforts and file for court protection," the company said.

Refocusing on repairs

Misawa Homes Co. will now take an equity stake in the company, with partners, the Nihon Keizai Shimbun reports.

Shokusan built around 550,000 houses, marketing them under the Homest brand. Misawa is expected to help Shokusan refocus on housing renovation and maintenance of those houses.

All of its 550 workers are expected to be dismissed, with around 100 rehired by the relaunched company. It will complete the 220 houses now under construction.

Home-renovating company Painthouse Co. is interested in taking over Shokusan's home-building operations, President Katsuhiko Nishimura said.

A 65 billion yen debt waiver from its lenders, which include Sanwa Bank, during the 1998-99 fiscal year wasn't enough to keep Shokusan afloat.

The company was listed on Tokyo first section of the Tokyo Stock Exchange.

Japan's stock market was closed on Monday for the Coming of Age holiday. Shokusan stock fell 6.25 percent to 30 yen on Friday.