WALKING DEAD REVITALIZATION
KEYWORDS: BANKRUPTCY, INDUSTRIAL REVITALIZATION, DAIEI, MITSUBISHI MOTORS

2004 was certainly the year of huge corporate come downs. Daiei, long referred to as a corporate zombie, the walking dead, is a major retailer which for years has been receiving rescue package after rescue package from both the government and its main banks as failed to manage its demise. Finally, as the banks were being hard-pressed by the government to reduce drastically their bad loans, the most recent and dramatic scene in this long playing drama finally came and Daiei was forced into the hands of the government’s Industrial Revitalization Corporation. The very day before Daiei’s president made “clear” that the company would never seek relief from that government organization and ended negotiations. He would seek relief from the private sector. That very night the representatives from the main banks, which had rescued the company again and again with rescue plan after rescue plan, told him if he did not go back to the Industrial Revitalization Corporation they would pull the plug. Daiei went back. The company president resigned. Incredible come down. The search then began for a possible private sector sponsor, or rescuer such as Walmart of the USA. This rescue of Daiei would be the largest rescue attempt by the Industrial Revitalization Corp as it will be buying the companies loans and in other ways helping it to rehabilitate. The IRC said it may seek to seek 1/3rd of the company to its sponsor and another 17% two years later for controlling interest, if it so desires.



In 2004, Kanebo, the major cosmetics and textile firm also sought relief with the Industrial Revitalization Corporation. Although the cosmetics business appeared healthy, textiles and its other businesses were losing massively. Much to the disappointment western corporate analysts the company rejected a plan for consolidation with Kao Corporation. The IRC said it would probably spin off the cosmetics division into a separate company anyway.

Daikyo, a major condo developer, and its main bank, UFJ Bank announced their intentions for also seeking relief from the IRC. The company in the future would concentrate on its condo business and drop its golf course and resort development efforts.

Scandal ridden Mitsubishi Motors, which saw its auto business ruined after discovery of decades of cover-ups of defective vehicles, and with would be rescuer Daimler-Chrysler also threatening to sue it, again over deception, also decided to seek rescue with the Industrial Revitalization Corporation under the Law on Special Measures for Industrial
Revitalization. The government looked ready to approve it.

The Industrial Revitalization Corporation was established in 2003 with a 10 trillion yen fund for the purpose of helping to rehabilitate Japanese corporations. Until 2004 it had only begun work on 17 smallish projects. Daiei and Kanebo certainly relieved concerns about not enough major projects to work on. The basic aim of the corporation is to peel off the healthy parts of a corporation and set that up as a new separated revitalized corporation

Copyright 2005. All rights reserved Attorney Roderick H. Seeman

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