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Lenders seek $700 million after Japanese payments firm’s collapse

The financial failure of Osaka-based Zentoshin has left 63 creditors with claims totaling ¥115.16 billion ($709 million), according to Tokyo Shoko Research.

By Taiga Uranaka and Hideki Suzuki

Creditors across Japan are trying to claw back more than $700 million from a payments firm suspected to have faked its financial statement for at least 20 years and abruptly collapsed into bankruptcy this week.

The financial failure of Osaka-based Zentoshin has left 63 creditors with claims totaling ¥115.16 billion ($709 million), according to Tokyo Shoko Research. The creditors are mostly regional banks and other local lenders, with the biggest amount owed to Kinkisangyou Shinkumi Bank in Osaka at about ¥22 billion, the credit research firm wrote in a report.

Zentoshin’s bankruptcy was triggered by difficulty securing additional financing after allegations of employee misconduct two years ago hit its reputation. Financial Services Agency officials don’t see the event triggering concerns about the soundness of the financial institutions, but the regulator will examine if the lenders had exercised proper due diligence and risk management before making the loans to the collapsed firm, said people familiar with the matter.

Tokyo Shoko released a list of creditors based on the bankruptcy petition Zentoshin submitted to the court. That showed that other major creditors include Tokyo Star Bank, owned by Taiwan’s CTBC Bank, and Towa Bank, based in Gunma Prefecture, with each of those claiming roughly ¥8 billion, Yamaguchi Bank in western Japan had lent about ¥7.5 billion.

Bankers Co., a Tokyo-based operator of loan-based crowdfunding, was also listed as a creditor with claims of about ¥2.1 billion. The company said on its website that it had managed funds that lent money to Zentoshin and would “take all possible measures to maximize recoveries.” However, if recoveries ultimately fall short, individual investors in those funds could also suffer losses, it said.

Zentoshin said it would “report on the status of its assets through its website and other channels to the extent possible.” The company also said there are currently no plans to hold a creditors’ meeting.

Tokyo Shoko has said Zentoshin is suspected of having falsified its financial statements for at least two decades and may have been effectively insolvent by about ¥60.5 billion. The research firm said the reported claims may differ from final confirmed claims because they are subject to change through collateral enforcement and other adjustments.

zentoshin (https://www.japantimes.co.jp/tag/zentoshin) , crowdfunding (https://www.japantimes.co.jp/tag/crowdfunding)

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