JAPAN Law and Practice Contributed by: Hajime Ueno, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
In contrast to civil rehabilitation, secured claims are bound by corporate reorganisation proceedings. Liquidating Proceedings Liquidating proceedings include bankruptcy and spe - cial liquidation. Bankruptcy A bankruptcy proceeding is a proceeding under the Bankruptcy Code of Japan, which is available to all types of business entities and individuals. It is a liq - uidating-type proceeding, with the aim of ensuring orderly liquidation and dissolution of business entities as well as securing fairness among creditors. Upon commencement of bankruptcy, the competent court will appoint a third-party trustee, usually a practising attorney who is equipped with knowledge and exper - tise in the field. Once the trustee is appointed, they will effectively take over all the power and authority over the estate of the bankrupt. Special liquidation Special liquidation is a proceeding under the Corpora - tions Act of Japan. It is a liquidating-type insolvency proceeding, available only to stock companies incor - porated under and pursuant to the Act. Upon com - mencement of the proceeding, the competent court will appoint a liquidator or liquidators to oversee the proceeding. The most typical use of special liquida - tion will be where a parent company shuts down an insolvent subsidiary. 1.3 Statutory Officers Civil Rehabilitation A supervisor ( kantoku-iin ) will be appointed by the competent court to oversee and supervise the man - agement of the debtor company. Supervisors report to the courts, with fiduciary-like duties imposed for the benefit of all unsecured creditors. The debtor itself, too, owes fiduciary-like duties to all unsecured credi - tors. In cases of involuntary filings, courts will typically elect to appoint an examiner ( chousa-iin ), who is tasked with checking whether the requirements to commence a civil rehabilitation proceeding have been satisfied; if the proceeding is to be commenced, the court will usually elect to appoint a trustee as opposed to allow -
ing the management of the debtor company to be “debtor-in-possession”. Corporate Reorganisation At the commencement of the proceeding, one or more trustees will be appointed by the competent court to take over the power and authority to manage the debtor company’s business. They owe fiduciary-like duties to creditors. However, prior to the commencement, in many cor - porate reorganisation proceedings, one or more provi - sional administrators ( hozen-kanrinin ) are first appoint - ed. Provisional administrators provisionally take over the business of the debtor before the appointment of the trustees. The most common practice is for the individuals appointed as preservation officers to also be appointed as trustees. Similarly to civil rehabilitation, in cases of involun - tary filings, the competent court will typically elect to appoint an examiner ( chousa-iin ), who is tasked with checking whether the requirements to commence a corporate reorganisation proceeding have been sat - isfied. Bankruptcy At the commencement of the proceeding, save for a few exceptional cases, experienced practising attor - neys will be appointed by the competent court as trustees to take over the power and authority of the management of the debtor. Trustees owe fiduciary-like duties to creditors. In bankruptcy, in cases of invol - untary filings, courts will typically elect to appoint an investigator, who is tasked with checking whether the requirements to commence a bankruptcy proceeding Once a petition to commence a special liquidation proceeding is filed, and provided the relevant court determines that the requirements for commencing the proceeding have been satisfied, the court will appoint a special liquidator. Special liquidators are not neces - sarily practising attorneys. have been satisfied. Special Liquidation
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