Supermarket 14th corporate failure in Japan

By staff and wire reports

TOKYO, Japan -- Supermarket chain Kotobukiya Co. became the 14th public company to go under this year in Japan.

Regional chain Kotobukiya filed Wednesday for protection from creditors in Kumamoto District Court, in Japan's most-southern prefecture.

The move dealt Japan's stock market yet another blow. After the recent failure of construction company Aoki Corp., investors have been waiting for more companies to topple.

Kotobukiya is the largest supermarket chain on Japan's most-southern island, Kyushu.

It was unable to bear its debt load, pegged at 205.8 billion yen ($1.6 billion), by research group Teikoku Databank.

Supermarket merger not going ahead

The company at first said it had "not decided" on seeking protection from its creditors.

That followed media reports on Wednesday morning that it had failed. Trading in the company's stock was suspended on the Osaka exchange after the reports.

Its shares were already trading at 14 yen, after falling to a record low of 8 yen on Tuesday.

But the company later confirmed it had failed. The supermarket decided it was unable to pay its debts after a merger fell apart with supermarket company Sun Live Co., according to the Asahi Shimbun.

Talks are thought to have collapsed because Sun Live - which like Kotobukiya is based in the city of Kitakyushu -- wanted to close unprofitable stores and cut jobs.

Japan's fourth-largest supermarket chain, Mycal Corp., collapsed in September. That shook the market and knocked the stocks of Japan's banks.

It also followed last year's collapse of Sogo, one of Japan's largest department-store chains.

Experts say the steady stream of corporate collapses is a positive sign, meaning Japan's banks are finally getting tougher on problem borrowers.

But investors have also sold off the stocks of banks with big exposure to the failed companies. They were selling Nishi-Nippon Bank Ltd., one of Kotobukiya's largest lenders, on Wednesday.

The Nikkei index was holding up despite the collapse, down 0.1 percent at 10,421.84 at the noon break.

Reuters contributed to this report.