Cashing out the subsidiaries — and not dissolving the company (2006)

Not that they would not fold it — they could not

The logic president Hiramatsu Kozo gave in January 2007 was simple. When you hold ¥75bn in cash and face ¥65bn in damages claims, no one can tell you whether it is all right to hand out the ¥10bn difference. Because creditors’ rights rank above shareholders’, the company could neither be closed nor distribute anything until the damages were fixed. From a shareholder’s point of view, more than ¥100bn of realisable assets sat immobile for four years — but that was not management declining to choose an exit; the litigation was blocking it.

Even so, what the company did during those four blocked years was to sell, one by one, the assets it had bought. Yayoi turned roughly ¥23bn into ¥74bn — the one deal that fetched a high price. It can also be read as a holding bought before the scandal simply appreciating with the market, rather than a business grown and revalued. When the revenue line in the year to March 2011 became “—”, what remained on hand was cash and lawsuits. The reason for keeping the corporation alive had come to lie not on the business side but only on the side of the damages.