Foreign bondholders seek to liquidate Takefuji

Foreign bond investors in Japan's Takefuji Corp filed a motion with a local court on Friday to liquidate the consumer lender, seeking a better recovery from their investment and challenging a court-led rehabilitation plan, two people familiar with the matter said.
The move could derail a decision by Takefuji's court-appointed administrator to let South Korean consumer lender A&P Financial take over the Japanese firm. The group of more than 10 institutions, led by Ireland's Burlington Loan Management and US-based Marathon Special Opportunities Fund, believe that the process handled by Takefuji's trustee, Eiichi Obata, was not fair and transparent, the people said.
The people spoke on condition of anonymity because the information was not yet public. No comment was immediately available from Obata's office. Under the US bankruptcy system, it is common for investors to get directly involved in a court-led rehabilitation and influence the outcome. The foreign investors are now testing whether that approach can work in Japan.
The group has hired Alvarez & Marsal, a global advisory firm specialising in business turnarounds, to gauge the value of assets at Takefuji, the people said. Alvarez & Marsal was hired by Lehman Brothers for its asset restructuring in the United States.
"This is a unique move by the bond holders. Usually trustees try to draw up reorganisation plans based on trust they have built up with large creditors," said Tadashi Wada, a lawyer specialising in corporate restructuring at Ito and Mitomi, a law firm.
Takefuji has about 1.5 trillion yen ($18.6 billion) in debt, of which 1.4 trillion yen consists of overcharged interest the company is obliged to repay to its customers, Obata said in May. One of the lawyers involved in the process said in May that Takefuji's outstanding corporate bonds totalled 93 billion yen, of which 50 billion yen was denominated in US dollars. The company had no outstanding loans from banks.
Takefuji, which did not have the financial backing of a Japanese bank, needed to rely on bond issuance to raise money. Takefuji, which failed in September, has been looking for an investor to help it remain in business. A&P Financial reached an agreement to buy Takefuji in April after it was chosen from a field of bidders that included Cerberus Capital Management, TPG and Japan's J Trust.