Fujita files for Chapter 11 after long slide down.

After a thrilling ascent and heart-pounding fall, the real estate rollercoaster ride is finally over for Fujita Corp. USA.

Citing $111 million in debts and only $4.6 million in assets, the U.S. arm of Tokyo-based Fujita Investments Co. Ltd., has filed for Chapter 11 bankruptcy protection.

Two months ago Fujita sold off its last asset, a Minnesota office building, with the resulting cash accounting for the whole of its assets at the time of the bankruptcy filing.

Fujita's once bustling Culver City offices are now nearly empty. Only its principals, Lars Hellmont and Tatsuo Fujii, remain to handle administrative matters until the bankruptcy case is settled, said Van Durrer, a partner in the corporate restructuring group of Skadden Arps Slate Meagher & Flom LLP representing the company.

The filing, said David Doupe, an executive vice president at CB Richard Ellis Inc., represents the end of an era.

"They were one of these Japanese syndicates that was overly funded by banks and other speculators," he said. "It's the last bit of the bubble from the early 1990s."

The bankruptcy filing lists the two largest creditors as Sumitomo Mitsui Banking Corp., which is owed $66.7 million, and UFJ Ltd., another Japanese banking operation, which is owed $43.75 million. Calls seeking comment from the two banks, which are discussing a possible merger, were not returned.

The balance of the debt is held by Fujita's landlord, Arden Realty Inc., its accountants at Ernst & Young LLP, and office and cell phone providers.

Durrer said Fujita has liquidated all its assets. He hopes to have the case completed by November.

"The bank lenders agreed before the case was filed that the remaining assets would be liquidated and some of the proceeds would be set aside for them and some for other creditors," Durrer said. "The banks have been very cooperative in the process. They are owed in excess of $100 million and there is only a few million to distribute. A cooperative process is more beneficial to everyone, and they have been very helpful."

High flier

When Fujita Investments opened its U.S. operation in the early 1970s, it sent Eisuke Katsuna to oversee operations. A few years later, the firm purchased the Santa Monica Sheraton Miramar hotel.

A decade later, in an effort to help grow the company, Fujita brought on L.A. real estate investor William Wells, who had developed the Marina City Club and a nearby parcel for Hughes Aircraft. Fujita gave Katsuna and Wells nearly complete control to run its Southern California operations.

Like other Japanese-backed real estate firms of the 1980s, Fujita took L.A. by storm, paying top dollar for trophy properties including the Encino Terrace Center and 1221 Ocean Avenue in Santa Monica, an apartment building once known as Lawrence Welk's Champagne Towers.

But the collapse of the real estate market in the early 1990s led the team heading the office to embark on risky refinancing schemes that ultimately ended in litigation and liquidation.

Katsuna and Wells were dismissed in 1996 and, in a suit filed a year later, Fujita contended that the pair approved more than $20 million in loans to 15 companies that were owned and operated by the pair. The loans, the suit claimed, scammed Fujita out of its profits.

According to the lawsuit, Katsuna and Wells in 1996 made a risky interest rate bet with Fujita's lenders that ended up adding another $46 million in debt. A settlement was reached after a brief trial in 2001 in which neither Wells nor Katsuna were required to pay any damages.

The company has struggled to turn itself around and restructure its massive debts since the two departed.

Fujita Investments sold off the bulk of the business--it now holds 11.5 percent--to California Investors Alliance LP, which has a 71 percent stake, AC Real Estate Corp. The new owners were brought on to help sell off the firm's remaining real estate assets.

The principals of California Investors Alliance and AC Real Estate could not be identified. There was no response to messages left for Hellmont and Fujii.

The company sold its last L.A. County property, the Sheraton Miramar, to hotelier Lew Wolff's investment group Maritz Wolff & Co. for $90 million in 1999. Wolff converted the property to his Fairmont hotel chain shortly after.

Still, the sell-off wasn't enough. With debts far exceeding its assets, Fujita tried to work out settlement agreements with the two banks before filing for bankruptcy.

"This process has been ongoing," said Durrer. "We sold the last property shortly before case was filed. All cash assets from sale of various properties over the past several years will go to pay off any remaining debts, but it won't come close to covering it all."