SFCG Goes Bankrupt With 338 Billion Yen Debt, Most in a Year

Feb. 23 (Bloomberg) -- SFCG Co., a Tokyo-based lender whose creditors include Citigroup Inc., collapsed in the biggest bankruptcy by a publicly traded Japanese company in more than a year, listing 338 billion yen ($3.6 billion) in liabilities.

SFCG, whose shareholders include Hikari Tsushin Inc. with an 11.5 percent stake as of Feb. 4, owes Citigroup 71 billion yen, according to a securities report filed by SFCG on Oct. 27. Shinsei Bank Ltd., owed 54.1 billion yen by SFCG as of July 31, led declines among Japanese lenders in Tokyo trading.

SFCG’s finances deteriorated because of difficulties obtaining credit and collecting on loans as the global financial crisis deepened, the company said in a statement today. Its shares, down 92 percent in the past year, will be delisted on March 24, according to the Tokyo Stock Exchange’s Web site.

A record 33 publicly traded companies in Japan declared bankruptcy last year as banks trimmed lending and consumers stopped spending money due to concern about jobs. Urban Corp., a Hiroshima-based developer, filed for protection with 255.8 billion in liabilities on Aug. 13, the biggest failure last year.

Overall corporate bankruptcies rose 15.8 percent to 1,360 cases in January, the eighth monthly increase.

Calls to Citigroup’s Tokyo office and to Shinsei Bank by Bloomberg News weren’t immediately returned.

Tokyo-based Shinsei fell 13 percent, the biggest decline among more than 1,600 companies tracked by the MSCI World Index, to a record-low 80 yen as of 9:56 a.m. in Tokyo. A 27-stock index of Japanese non-bank lenders dropped 6.5 percent to the lowest since at least 1983.

SFCG specializes in loans to small businesses. The lender, previously called Shohkoh Fund & Co., was ordered by regulators in 2000 to suspend its business for violating lending laws.

Hikari Tsushin, a Tokyo-based telecommunications company, hasn’t made loans to SFCG, spokesman Taichi Konno said.