How are priority creditors treated during bankruptcy in Japan?

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When a trustee creates a plan for reorganization of a corporation, he or she does not need to follow the absolute priority rule.  Instead, the trustee can create plan that allows the priority and the junior creditor to recoup a portion of their losses, as long as the junior creditor is not repaid on terms that are the same or better than the priority creditor.  For example, a plan might call for the priority creditor to receive 90% of his or her debt while the rest of the company’s assets are used to satisfy the debts of the junior creditors.

If you are a priority or junior creditor to a company undergoing corporate reorganization, please contact our office to set up a consultation regarding how best to protect your interests.