What types of bankruptcy are possible in Japan?

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In Japan, there are two main laws that deal with companies that are in dire financial condition: rehabilitation laws and insolvency laws.

Rehabilitation laws are designed to help the debtor company to establish a payment plan, modify the rights of unsecured creditors and allow the company to continue to do business. There are two separate rehabilitation laws, one for stock corporations and one for every other type of company.

Liquidation laws are designed to shut down the debtor company and distribute its assets among its creditors in the most efficient way possible. Liquidation laws are split between bankruptcy and special liquidations. The bankruptcy law is designed for companies that can no longer pay their debts, while the special liquidation law is mostly used by corporations to shut down an unneeded subsidiary.

If you have questions about Japanese bankruptcy law, or are afraid that one of your business partners may be facing bankruptcy, please contact our office for a legal consultation.