This is the first time the IRCJ has decided to help a major debtor of UFJ and it comes as UFJ seeks to aggressively reduce its exposure to its top 10 troubled borrowers. UFJ is one of Japan's four mega-banks but has been particularly exposed to non-performing property loans.

As part of the rehabilitation program, Daikyo's capital will be cut by 99.2 % and it will receive Y176.5 billion ($1.8 billion) in financial aid, in addition to a Y146.5-billion ($1.3-billion) debt waiver and Y30 billion ($269 million) via a debt-to equity swap from UFJ Bank as well as other banks. "The financial environment was getting tougher for us, especially with more than 60% of our total loans sourced from UFJ Bank," says Daikyo president Jihei Yamazaki.

As part of the IRCJ plan, Daikyo will hold a fire sale of its non-core assets that include golf courses, hotels, resorts and a real estate leasing business. The company has yet to indicate how much it hopes to raise from the disposals but they are expected to attract foreign buyers.