Contract termination and bankruptcy in Japan is a concern that many contracting parties face. A company contracted to perform an obligation for another company that enters bankruptcy usually has the option to unilaterally cancel the contract. Since the bankrupt company may not be able to pay the contracting company for the work it completes, it would be unfair to keep the contractor strictly bound to the terms of the agreement.
Furthermore, an employee of a company that enters bankruptcy also has the ability to unilaterally terminate the employment contract, even if the employment was for a fixed term that has not yet expired. Neither the employee nor the employer will be able to claim damages based on the termination of the employment contract.