Ailing mid-sized Japanese builder Nissan Construction Co Ltd said on Sunday it had filed for court protection from creditors with about 114.7-billion yen ($863.8 million) in total liabilities.
Nissan Construction became the third mid-sized Japanese general contractor to go bust in just under four months, following the bankruptcy of Sato Kogyo Co Ltd earlier this month and Aoki Corp in December.
The company said in a statement that it had filed with the Tokyo District Court for court-led business rehabilitation after holding a board meeting on Saturday where company officials decided to seek court-led protection.
"We judged that it would be difficult to rebuild our business solely by our own efforts and filed for the start of business rehabilitation proceedings," it said.
Nissan Construction said it was hurt by a rise in concerns about its financial health after it failed to collect about 9.8 billion yen in payments due on work it did for its biggest shareholder Mycal Corp, after the major retailer filed for bankruptcy protection last September.
Nissan Construction said its negative net worth -- the amount by which liabilities exceed assets -- totaled 10.9-billion yen as of Sunday, March 31, the last day of Japan’s 2001/02 business year.
Mycal’s failure made other companies shy away from doing business with Nissan Construction, company president Takeshi Fujita told a news conference.
"There was no one willing to deal with us when we wanted to procure materials," Fujita said, adding that his firm was ultimately forced to buy materials at higher prices, hurting the company’s bottom line.
Company officials added that Nissan Construction’s nine board members, including Fujita, would resign to take responsibility for the company’s woes.
Japanese builders, saddled with debt and weak assets after the asset-inflated bubble economy burst a decade ago, are struggling to stay afloat in an economy mired in recession.
With many of the firms surviving only on a drip-feed from banks, an industry shake-out is in the process.
Nissan Construction’s shares ended Friday’s trading down two yen or 4.76 percent at 40 yen.
The Tokyo Stock Exchange (TSE) said the firm’s shares will be delisted from the TSE’s first section on July 1.