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The Honolulu Advertiser
Posted on: Tuesday, November 26, 2002

Assets of bankrupt firm under scrutiny

By Andrew Gomes
Advertiser Staff Writer

A bankruptcy trustee in Japan yesterday filed a petition in U.S. Bankruptcy Court in Hawai'i to investigate the transfers of assets by subsidiaries of Sports Shinko Co. Ltd. in Hawai'i and on the Mainland.

The petition seeks authority under U.S. bankruptcy rules to investigate and recover Sports Shinko's U.S. assets, some of which were sold after a government debt-disposal agency in Japan forced Sports Shinko into bankruptcy there.

The Resolution and Collection Corp. of Japan, a government-operated creditor of Sports Shinko, forced the company into bankruptcy Jan. 28. Osaka-based Sports Shinko declared 210.9 billion yen ($1.8 billion) in liabilities, according to a Bloomberg News Service report citing Tokyo Shoko Research Ltd.

Days after the original bankruptcy filing, Hawai'i subsidiaries of Sports Shinko sold three golf courses and one hotel for an estimated $18 million. Another hotel was sold a couple of months later for an estimated $3.5 million.

In the filing yesterday, deputy trustee Keijiro Kimura said a Sports Shinko employee in Japan provided documents "that appear to indicate the former management concealed, siphoned off, and/or fraudulently transferred company assets."

Kimura in the filing did not identify the assets beyond being in the United States, and said he needs to investigate using U.S. bankruptcy laws because limited information exists in Japan about Sports Shinko's assets in this country.

Paul Alston, a Hawai'i attorney assisting Kimura in the case, said he could not comment beyond the filing.

Along with Hawai'i, Sports Shinko had subsidiaries in California and Florida that owed more than $50 million to the parent company, according to the filing.

Under Japan's bankruptcy laws, the trustee has the power to rescind contracts and fraudulent or preferential transactions by the debtor.

Sports Shinko paid roughly $164 million for three golf courses and three hotels in Hawai'i during the late 1980s. It sold all those properties for an estimated $26 million.

Local developer Peter Savio bought one hotel nearly a year before the bankruptcy filing in Japan. The remaining assets were bought by a company headed by local developer and University of Hawai'i regent Bert Kobayashi after Sports Shinko's bankruptcy filing in Japan.