JAPAN Law and Practice Contributed by: Hajime Ueno, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
whether to commence the proceedings. The duties and powers of the trustee in a corporate reorganisa - tion are basically the same as those in a bankruptcy (taking over all responsibilities, power and authority to run the debtor company, subject to the supervi - sion of the court), and the examiner’s roles, rights and responsibilities, where the court appoints incumbent management as a trustee in corporate reorganisation, are almost the same as the supervisor in a civil reha - At the commencement of each proceeding, the court appoints statutory officers as described above. They can contract accountants, financial advisers, etc, if and to the extent necessary. 4.6 The Position of Shareholders and Creditors in Restructuring, Rehabilitation and bilitation. Advisers In civil rehabilitation, general unsecured creditors and secured creditors are treated differently with regard to exercising rights, but there is only one class with regard to the vote. A secured creditor ( betsujyo-ken- sha ) can exercise its “rights of separate satisfaction” which effectively means a secured creditor can fore - close on its collateral or otherwise enforce its rights even during the civil rehabilitation proceeding, but with regard to voting, such creditor may exercise its right as a general unsecured creditor only for the part of its claim not covered by its collateral (ie, a part of the claim for which discharge will not be achieved via a foreclosure on the collateral). Conversely, in a corporate reorganisation, general unsecured creditors and secured creditors are both prohibited from exercising rights during the proceed - ing, but they are put into separate classes for pur - poses of creditors’ voting. Creditors’ Committee The court may give approval to the participation of a committee consisting of creditors in the proceedings, when such a creditors’ committee meets the require - ments, such as the majority of creditors consent to the committee’s participation, and it is found that a credi - Reorganisation Roles of Creditors Class of creditors
tors’ committee would properly represent the inter - ests of creditors as a whole. However, formulation of a creditors’ committee is a rarity in Japan as there are very few cases. If actually formulated, the creditors’ committee will be authorised to state its opinions to the court, the debtor or a supervisor/examiner, and will have certain monitoring rights. Information Available to Creditors Creditors can receive certain information during the proceedings, such as: • a report by the debtor (or trustee) regarding (i) the debtor’s property, etc, at the time the proceedings commence; and/or (ii) the liabilities of the debtor’s directors/officers; • the Plan; or • a report by the supervisor/examiner required by the court, regarding the commencement of the pro - ceedings or the Plan, etc. In addition, creditors can examine and inspect docu - ments submitted to the court by the debtor and peer creditors. Rights of Set-Off A creditor can set off its pre-petition obligation with a pre-petition claim against the debtor. However, a cred - itor can set off only until the expiration of the claims filing period, and when the time that the obligations of both parties become due and suitable for set-off has arrived before the expiration of the claim filing period. As long as these conditions are met, set-off will not be suspended or stayed in the absence of a consensual agreement. Stay Unlike US Chapter 11, there is no “automatic stay” in Japan. Pre-commencement The court may issue a temporary restraining order that prohibits the disposition by the debtor of its property. By this order, the debtor is prohibited from making payments or disposing of collateral. To prohibit a com - pulsory execution, or to stay a foreclosure on a secu - rity interest, the debtor needs to obtain a separate “pre-commencement stay order”.
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