Japanese trading house Itochu Corp. said Wednesday it has formally decided to help rebuild Bigmotor Co. after conducting due diligence on the assets of the used car dealership mired in an insurance fraud scandal.

Itochu will set up a new company with its subsidiary and investment fund, J-Will Partners, in April and acquire Bigmotor's used car and car-repair businesses, the trading house said, without disclosing the size of the planned investment.

The founding family of the dealership, widely seen as having created the corporate culture that led employees to commit fraud to improve performance, will not be involved in the new company's business in any way, Itochu said.

Itochu and its partners, which have been studying the possibility of turning around Bigmotor since November, have concluded that there is a good chance of successful reform, making it 'worth the effort,' the trading house said.

Under a plan being considered, Bigmotor's main operations will be transferred to the new company while the remaining aspects of the dealership will address the fraud scandal. Current Bigmotor employees will continue with the company, Itochu said.

Bigmotor has been seeking sponsorship due to a significant decline in sales after it was found to have charged excessive repair fees by intentionally damaging customers' cars and making fraudulent insurance claims.

By acquiring Bigmotor's assets, Itochu aims to create synergies with the car-related businesses it has already invested in, sources familiar with the matter have said.

The trading house is the biggest shareholder in Tokyo Century Corp., which runs rent-a-car services, while it also has Yanase & Co., an importer of luxury cars, as a subsidiary.

Itochu also has a retail insurance business, which could collaborate with the used car business as Bigmotor's permit to operate as an insurance agency was revoked following the scandal, the sources said.

==Kyodo

© Kyodo News International, Inc., source Newswire