Goldman Sachs Group Inc is seeking new terms on last year's biggest bankruptcy in Japan, the US$4.1 billion collapse of STT Kaihatsu, squaring off against Lone Star Funds for control of 11 failed golf courses.
Lone Star, a Texas-based fund, defeated Goldman in December to become STT Kaihatsu's financial sponsor. Goldman, a major creditor to eight of the courses, says Lone Star's valuation for them is a third lower than its own, according to court documents that outline Goldman's argument.
The claim, which Goldman brought before Tokyo District Court yesterday, may revive a bid to add STT Kaihatsu to its 30 golf properties in Japan, the largest for an overseas investor. Goldman and Lone Star, the second-biggest golf investor, are betting they can make golf clubs more profitable and pocket the returns.
"It's rare to see one foreign firm confronting another in Japan," said Yoshifumi Suzuki, a corporate bankruptcy analyst at Teikoku Databank Ltd.
"It's reasonable for Goldman to want to make sure the interests of creditors are protected."
Goldman's claim focuses on which bankruptcy code should be applied to STT Kaihatsu. The original procedure, known as civil rehabilitation, left the company's own management in place, working with Lone Star to reorganize the business. Goldman asked the court to place the company under corporate rehabilitation, allowing management to be replaced by a financial receiver.
Corporate rehabilitation
"Corporate rehabilitation is the best choice to ensure fairness to creditors and to avoid misuse of the civil rehabilitation law," said Orlando Camargo, a Goldman spokesman.
Randy Work, president of Lone Star Japan Acquisition LLC, wasn't available to comment. Takehisa Takamatsu, a Lone Star executive vice president, didn't return calls.
In the court document, which Bloomberg News obtained, Goldman said the assets of the eight golf courses for which it is a creditor are worth Japanese Yen 23.5 billion (US$197 million), compared with a Japanese Yen 15.4 billion valuation given by STT Kaihatsu and Lone Star. Goldman's Camargo declined to comment on the valuations.
The courses include Prestige Country Club in Tochigi Prefecture, and Chiyoda Country Club in Ibaraki Prefecture, both north of Tokyo. The biggest difference in values is for Grand Slam Country Club, also in Ibaraki, which Goldman values at Japanese Yen 1.85 billion and the company at Japanese Yen 616 million, the document shows.
"The creditors' interests are extremely harmed," the document said.
Disputes over bankruptcies will increase after 109 golf courses collapsed last year, double the 52 that went belly-up the previous year, said Suzuki, the bankruptcy analyst.
Goldman and Lone Star are increasingly investing in distressed assets in Japan. In addition to the 30 golf courses it owns, Goldman was selected as the financial sponsor for failed golf operator Sports Shinko Ltd, which has another 30 courses.
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