Restructuring and insolvency—Japan—Q&A guide

The following Restructuring & Insolvency practice note provides comprehensive and up to date legal information covering:

  • Restructuring and insolvency—Japan—Q&A guide
  • 1. What main legislation is applicable to insolvencies and reorganisations?
  • 2. What entities are excluded from customary insolvency or reorganisation proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?
  • 3. What procedures are followed in the insolvency of a government-owned enterprise? What remedies do creditors of insolvent public enterprises have?
  • 4. Has your country enacted legislation to deal with the financial difficulties of institutions that are considered ‘too big to fail’?
  • 5. What courts are involved? What are the rights of appeal from court orders? Does an appellant have an automatic right of appeal or must it obtain permission? Is there a requirement to post security to proceed with an appeal?
  • 6. What are the requirements for a debtor commencing a voluntary liquidation case and what are the effects?
  • 7. What are the requirements for a debtor commencing a voluntary reorganisation and what are the effects?
  • 8. How are creditors classified for purposes of a reorganisation plan and how is the plan approved? Can a reorganisation plan release non-debtor parties from liability and, if so, in what circumstances?
  • 9. What are the requirements for creditors placing a debtor into involuntary liquidation and what are the effects? Once the proceeding is opened, are there material differences to proceedings opened voluntarily?
  • More...

Restructuring and insolvency—Japan—Q&A guide

This Practice Note contains a jurisdiction-specific Q&A guide to restructuring and insolvency in Japan published as part of the Lexology Getting the Deal Through series by Law Business Research (published: June 2021).

Authors: Anderson Mōri & Tomotsune—Taro Awataguchi

1. What main legislation is applicable to insolvencies and reorganisations?

In Japan, there are mainly four types of legal insolvency proceedings:

  1. bankruptcy proceeding;

  2. special liquidation proceeding;

  3. civil rehabilitation proceeding; and

  4. corporate reorganisation proceeding.

Bankruptcy and special liquidation are proceedings for liquidation and winding up of the debtor, while civil rehabilitation and corporate reorganisation are proceedings for revitalisation of the debtor's business.

These legal insolvency proceedings do not commence unless they are petitioned to the competent district courts.

This chapter will focus on corporate reorganisation, civil rehabilitation and bankruptcy unless there is a need to refer to other proceedings. The focus will be on companies (corporations), not individuals, as the debtor.

2. What entities are excluded from customary insolvency or reorganisation proceedings and what legislation applies to them? What assets are excluded or exempt from claims of creditors?

Bankruptcy and civil rehabilitation may be utilised by any type of entity, including companies and individuals. Corporate reorganisation and special liquidation are available only to stock corporations. This rule has long been applied to Japanese corporations only; however, in recent cases, overseas corporations established under Panama, Singapore and the Netherlands have been subject to

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