Zentoshin Files for Bankruptcy with ¥115 Billion in Creditor Claims

Osaka-based payments firm Zentoshin collapsed into bankruptcy this week, leaving 63 creditors with claims totaling ¥115.16 billion ($709 million), Japan Times reported. Tokyo Shoko Research said Zentoshin is suspected of falsifying its financial statements for at least 20 years and may have been effectively insolvent by about ¥60.5 billion.

The bankruptcy petition listed Kinkisangyou Shinkumi Bank in Osaka as the largest creditor at about ¥22 billion.

Tokyo Star Bank, owned by Taiwan’s CTBC Bank, and Towa Bank in Gunma Prefecture each hold claims of roughly ¥8 billion, while Yamaguchi Bank in western Japan is owed about ¥7.5 billion. , a Tokyo-based loan-based crowdfunding operator, is listed with claims of about ¥2.1 billion.

The company said it managed funds that lent to Zentoshin and would take all possible measures to maximize recoveries, adding that individual investors could suffer losses if recoveries fall short.

Zentoshin’s bankruptcy followed difficulty securing additional financing after allegations of employee misconduct two years ago. The firm said there are currently no plans to hold a creditors’ meeting and will report on the status of its assets through its website and other channels to the extent possible.

Financial Services Agency officials do not see the event triggering concerns about the soundness of the financial institutions, though the regulator will examine whether the lenders exercised proper due diligence and risk management before extending the loans, according to people familiar with the matter.

Tokyo Shoko Research noted that reported claims may differ from final confirmed amounts due to collateral enforcement and other adjustments.