Restructuring in Japan

✍ Scribed by Shinjiro Takagi

• Publisher: John Wiley and Sons
• Year: 2003
• Tongue: English
• Weight: 96 KB
• Volume: 12
• Category: Article
• ISSN: 1180-0518
• DOI: 10.1002/iir.106

✦ Synopsis

There are three available schemes in Japan to reorganize distressed business corporations with excessive debts. They are; 1) an out of court workout in accordance with the Guidelines for the Workout which was established in 2001, referring to INSOL 8 Principles; 2), a civil rehabilitation proceeding under the Civil Rehabilitation Law which was enacted in 1999 abolishing the former Composition Law of 1927 and; 3) a corporate reorganization proceeding under the Corporation Reorganization Law which was enacted in 1951 and was the subject of major reform in December 2002. Also a Law Relating to Recognition and Assistance for Foreign Insolvency Proceedings was enacted in 2000 adopting many provisions included in the UNCITRAL Model Law on Cross Border Insolvency and thus e¡ectively abolishing notorious terriotorialism. Still, reformation of bankruptcy laws is on the way and expected to be completed before the end of next year of 2003. As reorganization proceedings were expedited and streamlined by the enactments of the Civil Rehabilitation Law and Corporate Reorganization Reform Law, the remaining portion to be reformed in bankruptcy laws may include non-procedural matters including avoidance powers, rejection and assumption of executory contracts, priority for wages and sovereign debts, subordination of insiders' rights and so on.

Along with the law reforms, practices to deal with bankruptcy and reorganization cases are changing dramatically, led by the Tokyo and Osaka District Courts. Almost all courts in Japan are opening their gates wider to reorganization cases and the cases are being handled more expeditiously.