FAQ

December 27, 2017

How are priority creditors treated during bankruptcy in Japan?

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.
December 4, 2017

What types of compulsory execution are there in Japan?

In Japan, compulsory execution is divided into two general categories, compulsory execution of a pecuniary claim and compulsory execution of a non-pecuniary claim. 
November 10, 2017

How does the Japanese government collect debts?

When someone owes a tax burden in Japan, the government will first issue a series of warning letters.  If the debtor ignores these letters and continues to neglect payment, the tax authorities will issue another warning letter stating that, if payment is not made, they will forcibly collect the debt through compulsory execution. At this point, if the debtor still does not pay, the government can claim his or her assets in Japan through compulsory execution.  These assets can include bank accounts or real property in Japan.
October 12, 2017

How can you stay compulsory execution in Japan?

There are certain ways to stay an order of compulsory execution and prevent your property from being seized immediately.  Most of them involve a court order stating that compulsory execution is not permitted against the property in question for one of several legal reasons.  Authenticated civil records, settlement agreements or other documents that state that compulsory execution is not to be carried out against the property also result in a stay of compulsory execution.