A Tale of Controversy and Confusion
Funai Electric Co., a once-renowned audiovisual equipment maker, has found itself embroiled in a complex and controversial bankruptcy saga. The company's journey towards insolvency began with its sale to an investment fund for a mere 1 yen, raising eyebrows and sparking questions about the motives behind the transaction.
Tomokazu Ueda, the former president of Funai, transferred the controlling interest to EFI Kabushiki Fund just before his resignation in September 2023. The fund acquired all shares in a special-purpose company that owned Funai and its parent for the symbolic price of 1 yen. This unusual transaction has left many wondering about the true reasons behind Ueda's decision.
Adding to the confusion, Ueda has not provided any explanation to Funai employees regarding the 1-yen sale. However, in a November interview, he claimed that the company was sold for such a low price due to its financial struggles. He also emphasized that the sale was not driven by personal interests.
The contract between Ueda and EFI Kabushiki Fund contains several intriguing clauses. Notably, Ueda is not obligated to repay a significant loan he and another company he owns borrowed from Funai. Additionally, the contract stipulates that Ueda's responsibility as a Funai director will not be pursued, and he retains the right to repurchase all shares for 1 yen under certain conditions.
Funai's bankruptcy proceedings, approved by the Tokyo District Court in October 2023, have been challenged by the new management team installed by EFI Kabushiki Fund. Yoshiaki Harada, the current chairman of Funai, has applied for rehabilitation under the Civil Rehabilitation Law, arguing that the bankruptcy proceedings were filed by an unauthorized director and that the company has sufficient assets to meet its liabilities.
Harada's claims are further supported by the fact that the Funai group, with its numerous subsidiaries, boasts a net worth of 20 billion yen. The new management team plans to revitalize Funai by expanding into new businesses like storage batteries for renewable energy and securing funds through the sale of TV operations.
The legal complexities surrounding Funai's bankruptcy proceedings and the conflicting claims from different parties have created a confusing and uncertain situation. While the court's decision to initiate bankruptcy proceedings is rarely overturned, switching to rehabilitation procedures under the Civil Rehabilitation Law presents significant challenges.
Funai's journey towards recovery will be anything but straightforward.