JAPAN Law and Practice Contributed by: Hajime Ueno, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
tory), the Supreme Court has recognised that a pool of movable properties can be subject to a single security interest if the scope of the subject matter is specified in some way (such as by designating the type, location and quantity of the movable properties in the pool). Common forms of security interests over movable property are as below, with pledges and security assignments being the more common forms: • security interests under the Civil Code, such as: (a) pledges over movables; (b) statutory liens on movables; and (c) repurchase arrangements; • security interests recognised by court precedents, such as: (a) security assignments; (b) pre-agreed resale transactions; and (c) retentions of title. Pledges over movable property are created and grant - ed by: • an agreement (not necessarily in writing) between the creditor and the owner of the movable prop - erty; and • delivery (which includes actual delivery, summary delivery and transfer of possession by instruction, but excludes constructive delivery) of the subject matter to the creditor. Pledges over movable property are perfected by continuous possession of the subject matter of the pledge. Security assignments for movables are created and granted by a granting contract (not necessarily in writing). They are normally perfected by delivery, but can also be perfected by registration if the assignor (grantor of the security assignment) is a corporation according to a certain statute specifically address - ing additional measures for perfections. In contrast with pledges, delivery of the subject matter can take the form of constructive delivery, as confirmed by the Supreme Court. The Supreme Court has also decided that a credi - tor can perfect its security assignment over a pool of
movable properties as soon as the assignor (usually the debtor) acquires possession of new or additional movable properties that are specified as part of the pool. This is possible if the assignor and the assignee (that is, the creditor) agree that the creditor is deemed to have acquired possession of the new or additional movable properties by constructive delivery from the assignor to the creditor, when the assignor acquires possession of the movable properties. Equity Shares, Intangible Property, Intellectual Property and Accounts A pledge ( shichi ken ) or umbrella pledge ( ne shichi ken ), and security assignment ( joto tampo ken ) or umbrella security assignment ( ne joto tampo ken ) are the norm. Rights of Secured Creditors With any type of security interest, secured creditors are entitled to foreclose and enforce their security interests. However, secured creditors could face a practical burden due to the statutory requirement for court involvement with respect to foreclosure of most of those security interests. Pledges and security assignments, however, are enforceable/foreclosable without court involvement, which is one of the reasons why they are commonly used forms of security. Court involvement can be viewed as problematic for several reasons, most notably the (i) timing issue, as it would take longer time to conclude the enforcement/foreclo - sure, and the (ii) pricing issue, as it is believed that a court-run auction results in lesser proceeds compared to privately run auctions. 2.4 Unsecured Creditors Unsecured creditors have rights to obtain an attach - ment order from a court with respect to the relevant debtor’s assets or seize such assets with a court order. However, unsecured creditors will need to obtain a court judgment unless unsecured creditors have a notarised document evidencing the claim and allowing such document to function in lieu of a court judgment. Also, if unsecured creditors owe monetary obligations against the relevant debtor, then unse - cured creditors are allowed to set-off their obligations against their claims, if both the obligations and the claims are due and payable.
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