Assumption of borrowings, litigation and liquidation loss associated with the dissolution of the joint venture with J Steel
First written in FY2023-Q3. 2 of 7 entries say "Materialised", first in FY2023-Q3. Latest entry: FY2025.
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- FY2025MitigatedAnnual report
「In consideration of the impact that the prolonged litigation could have on future management, the company decided to bring the matter to an end through a settlement.」
The litigation with J Steel ended through a settlement, while the company recorded a ¥301 million litigation-related loss and a ¥511 million allowance for doubtful accounts expense, confirming the receivable recovery risk as a loss. - FY2025-H1WorsenedAnnual report
「However, given J Steel's current handling of the litigation and other circumstances, the likelihood of an early resolution had declined. The company determined that continuing the contract would reduce the amount recoverable from its receivable because of ongoing professional fees and other expenses. In these circumstances, after requesting that J Steel terminate the contract and exercising its rights as a creditor again, the company considered J Steel's financial condition and other factors, recorded an allowance for the amount expected to be uncollectible, and recognized ¥495 million under allowance for doubtful accounts in investments and other assets on the interim consolidated balance sheet. J Steel has filed an action seeking, among other things, an injunction against the contract termination on the grounds that the company's procedures were improper, and the matter is currently in litigation.」
Because the likelihood of an early resolution of the litigation with J Steel declined and the risk of collecting the receivable increased, the company recorded an allowance for doubtful accounts of ¥495 million. Litigation seeking, among other things, an injunction against the contract termination is also now ongoing. - FY2024WorsenedAnnual report
「After requesting that J Steel terminate this contract and exercising its rights as a creditor again, the company considered J Steel's financial condition and other factors, recorded an allowance for the amount expected to be uncollectible, and recognized ¥523 million as an allowance for doubtful accounts expense under extraordinary losses.」
The collectibility of the ¥1,100 million receivable from J Steel declined, and the company recorded an allowance for doubtful accounts of ¥523 million. The recovery risk disclosed in the previous fiscal year in connection with the payment made on J Steel's behalf and the litigation materialized as an expected accounting loss. - FY2024-Q2Restated the guarantee obligation at AUD 11 millionAnnual report
「In the previous consolidated fiscal year, a customer exercised its rights and the financial institution honored the guarantee, resulting in J Steel incurring a payment obligation of AUD 11 million to the financial institution. Because the company had provided a parent-company guarantee for the bank guarantee, it made a payment of AUD 11 million to the financial institution on J Steel's behalf and recorded a receivable from J Steel of the same amount under "Other" in investments and other assets on the consolidated balance sheet. J Steel is in litigation with the customer seeking the return of the amount paid under the contract, and if the amount is returned, the payment made by the company on J Steel's behalf will also be returned to the company. Based on a reasonable estimate of the collectibility of the company's receivable from J Steel at this time, no allowance for doubtful accounts has been recorded.」
The latest notes state that the payment obligation and payment made on behalf of J Steel in connection with the guarantee and related litigation amounted to AUD 11 million. They also reiterate that the litigation remains ongoing and that no allowance for doubtful accounts has been recorded. - FY2024-Q1RestatedAnnual report
「In the previous consolidated fiscal year, a customer exercised its rights and the financial institution honored the guarantee, resulting in J Steel incurring a payment obligation of ¥1,059 million to the financial institution. Because the company had provided a parent-company guarantee for the bank guarantee, it made a payment of ¥1,059 million to the financial institution on J Steel's behalf and recorded a receivable from J Steel of the same amount under "Other" in investments and other assets on the consolidated balance sheet. J Steel is in litigation with the customer seeking the return of the amount paid under the contract, and if the amount is returned, the payment made by the company on J Steel's behalf will also be returned to the company. Based on a reasonable estimate of the collectibility of the company's receivable from J Steel at this time, no allowance for doubtful accounts has been recorded.」
The company continues to disclose the ¥1,059 million payment made on behalf of J Steel, the recognition of a receivable of the same amount, the litigation with the customer and the absence of an allowance for doubtful accounts. - FY2023MaterialisedAnnual report
「During the current consolidated fiscal year, a customer exercised its rights and the financial institution honored the guarantee, resulting in J Steel incurring a payment obligation of ¥1,059 million to the financial institution. Because the company had provided a parent-company guarantee for the bank guarantee, it made a payment of ¥1,059 million to the financial institution on J Steel's behalf and recorded a receivable from J Steel of the same amount under "Other" in investments and other assets on the consolidated balance sheet.」
The guarantee risk associated with the dissolution of the joint venture with J Steel materialized, and the company made a payment of ¥1,059 million on J Steel's behalf. Litigation between J Steel and its customer remains ongoing. - FY2023-Q3MaterialisedAnnual report
「In conjunction with this share transfer, the company decided to assume J Steel's borrowings of AUD 8 million, for which the company had provided a bank guarantee. Accordingly, in the consolidated financial results for the third quarter of the fiscal year ending August 2023, the company recorded ¥1,367 million as a loss on liquidation of an affiliated company under extraordinary losses. J Steel is involved in litigation with a customer that placed orders for construction work.」
In connection with the dissolution of the joint venture with J Steel, the company assumed AUD 8 million of borrowings covered by a bank guarantee and recorded a ¥1,367 million loss on liquidation of an affiliated company. J Steel also has construction contracts subject to ongoing litigation, and the company stated that it would continue to cooperate toward a resolution after the joint venture was dissolved.