Major consumer credit firm Takefuji Corp., a fourth largest consumer loan lender in Japan, has filed for bankruptcy protection on 28th September 2010. It intends to slash its debt burden under the Corporate Rehabilitation Law and turn itself around by finding a financial sponsor.
It was driven under by a flood of claims from customers seeking reimbursement of excessive interest charges, adding to a sharp drop in demand for new loans. The company’s total liabilities stand at about 400 billion yen, and the amount of excessive interest charges–both claimed and not claimed–may ultimately reach a few hundred billion yen. Takefuji was forced to return 86.5 billion yen in excessive interest charges in the 2009 fiscal year ending in March. For fiscal 2008 ending in March last year, Takefuji posted an after-tax loss of 256 billion yen. Takefuji’s outstanding loans at the end of June stood at 510 billion yen with about 970,000 customers holding accounts. Both these numbers were about 30 percent of the company’s peak in 2002.
Consumer lenders have been struggling to survive since a 2006 Supreme Court ruling found their “gray zone” interest rates–from 15 percent to 29.2 percent–to be illegal. Many customers started demanding refunds of excessive interest charges.
