Takefuji customers file plan to recover debt

Customers of Takefuji presented a plan on Friday to recover the debt that the bankrupt Japanese consumer lender owes them, saying they want members of the founding family to inject money into Takefuji to help repay creditors.
The group of 265 customers is seeking refunds of overcharged interest they paid to Takefuji in the past. Takefuji's business was crippled by a 2006 legal ruling forcing Japanese consumer lenders to repay overcharged interest to customers.
"Takefuji's family members accumulated a fortune from dividend payments made from profits Takefuji had made from illegal interest rates," said Mitsuru Naito, a lawyer representing the group. "Some customers were forced to lead miserable lives saddled with high interest rates on the money they borrowed."
Japan's supreme court earlier this year granted a 200 billion yen ($2.5 billion) tax refund to Toshiki Takei, the son of Takefuji's founder, based on a ruling that the son did not need to pay gift taxes imposed on assets he received from his parents.
That money should be used to repay money to customers, Naito said, adding that if other family members inject their own money, the debt recovery rate would be higher. The recovery rate would be around 14 percent with the 200 billion yen injection, Naito said. That would be higher than in the plan presented by Takefuji's trustee, which Naito estimated around 2 to 3 percent.
The plan from the customers would become the third proposal, following the motion filed by a group of foreign bond investors on Friday last week, who sought to liquidate the consumer lender. Takefuji's court-appointed administrator is also presenting its own plans on July 15, under which South Korean consumer lender A&P Financial is allowed to take over Takefuji and continue business.
Takefuji has about 1.5 trillion yen in debt, of which 1.4 trillion yen consists of overcharged interest the company is obliged to repay to its customers, Eiichi Obata, Takefuji's court appointed trustee said in May.
Takefuji has about 900,000 customers who are claiming the interest refund, while it has 29 groups of debt holders. It had no exposure to banks or any other financial institutions, according to documents presented by the trustee in May. Takefuji, which failed in September, was 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.