JAPAN Law and Practice Contributed by: Hajime Ueno, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
• the creditor’s claim or shareholder’s voting rights; and • facts establishing that there is a “threat” of insol - vency. Neither a corporate reorganisation nor civil rehabilita - tion proceeding has procedures set out for a group of entities; while both corporate reorganisation and civil rehabilitation allow procedural consolidation, each debtor entity will have to be dealt with separately. Third-Party/Non-Debtor Release Third-party/non-debtor releases via a plan are not available under Japanese insolvency/restructuring regimes. To be complete, directors’ liability towards the debtor company itself could be resolved through investigations and determinations by a trustee (in the case of corporate reorganisation) or a supervisor (in the case of civil rehabilitation) with an approval of the presiding court; however, this does not release direc - tors’ liabilities towards creditors, if applicable. Arbitration Creditors will have a slim chance of opting for arbitra - tion as opposed to court proceedings in the context of corporate reorganisation or civil rehabilitation. 4.2 Statutory Restructuring, Rehabilitation and Reorganisation Procedure General Overview As described above, civil rehabilitation and corporate reorganisation both have similar characteristics to those of US Chapter 11. In Japanese statutory reor - ganisation processes, the debtor typically takes the initiative to formulate a restructuring/reorganisation plan (the “Plan”) under the court’s supervision. The main processes to effectuate a Plan are: • determining estates and claims; • submission of a Plan; • voting on the submitted Plan by the creditors’ meeting; and • the court’s confirmation of the Plan. Unjustifiable Purpose “Threat” of insolvency is required to commence pro - ceedings under either civil rehabilitation or corporate reorganisation; as a result, any petition that does not
purport to address a restructuring of an insolvent company would not be justified (ie, would be denied). Also, where a petition is filed for other unjustifiable purposes or it is not filed in good faith, the court must
dismiss with prejudice on the merits. Determining Estates and Claims, Etc Determining estates
The debtor would be responsible for investigating and evaluating its assets and property at the time the pro - ceedings commence (the “Estate”) and submitting a report to the court. Determination of claims As a default rule, creditors’ claims are calculated and recognised based on: • the claim register and submission of proofs of Not all contingent claims would be entitled to receive repayments or holders thereof be enabled to vote, but conditional claims would receive repayments when the relevant condition is met. However, the debtor shall be discharged from all its liabilities for all rehabilitation claims (in a civil rehabilitation)/reorganisation claims and secured reorganisation claims (in a corporate reorganisation) and, when an order to confirm a Plan (“Plan Confirmation Order”) by the court becomes final and binding, such discharge would extend to any and all contingent claims which are not registered by creditors (save for a few exceptions and certain tax claims), unless approved and a part of the Plan. Submission of Plan General timeline There is no statutory deadline for a debtor to submit a Plan but, for example, the Tokyo District Court gener - ally sets a deadline (via a court order) for the submis - sion of a Plan, which is typically three months after the petition in a civil rehabilitation and 11 months in a corporate reorganisation. As there is no concept of an exclusivity period, any creditor may also prepare and propose a Plan to the court within the period specified by the court. The deadline can also be extended by a separate court order and, in practice, especially in claims by each relevant creditor; and • approval or objection by the debtor.
259 CHAMBERS.COM
Powered by FlippingBook