FAQ

August 8, 2016

What is the interest rate used by courts in Japan?

The Japanese the Commercial Code specifies a statutory interest rate of 6% annual to be applied between merchants when no interest rate is specified in the contract.  If two business partners agree to a loan in their contract, but neglect to specify an interest rate, the court will automatically set the rate at 6%.
August 22, 2016

Is it possible to get a debt paid back from a company that files for bankruptcy?

It is always possible that a debtor company may file for bankruptcy if confronted with a debt that it cannot pay.  However, this does not necessarily mean that the creditor will not be able to collect at lease part of the debt.  A creditor should be given proper notice before the start of a bankruptcy hearing and will have a chance to claim part of the bankrupt debtor’s assets.
September 12, 2016

When does bankruptcy start?

For individuals, bankruptcy starts when the person is unable to pay a debt and the time for payment has lapsed.  For corporations the standard is a little different.  Corporations may file for bankruptcy when they are unable to pay, similar to a normal person, or when they are in a state of “balance sheet insolvency.”  Balance sheet insolvency is when the corporation is unable to make payments even by selling its assets.
October 11, 2016

What type of evidence should be collected before enforcing a debt in Japan?

Usually parties will negotiate among themselves through email before resorting to the legal process to enforce a debt.  If these negotiations fail, often the content of these email exchanges becomes the evidence in a legal case against the debtor.  Therefore, it is important to draft emails in a way that maximizes their potential use in future litigation.