JAPAN Law and Practice Contributed by: Hajime Ueno, Nishimura & Asahi (Gaikokuho Kyodo Jigyo)
commencement stay order” to prohibit such action by a security holder. Pre-Judgment Attachments Once bankruptcy commences, existing pre-judgment attachments are automatically suspended or extin - guished. Between the petition for commencement of the proceedings and the order to commence, pre- judgment attachments are not automatically sus - pended so a separate court order must be obtained to prohibit or suspend pre-judgment attachments. Existing Equity Owners Existing equity owners can receive a distribution from the debtor only when all creditors superior to the equity owners are paid in full. In practice, since the commencement requires the insolvency of the debtor in bankruptcy, and in special liquidation a “threat” of insolvency, the debtor acquires existing shares with no consideration and the existing equity interests will be cancelled and extinguished upon completion of the proceeding. Third-party/non-debtor release Third-party/non-debtor releases are not available under Japanese liquidation regimes. 6. Cross-Border Issues in Insolvency 6.1 Sources of International Insolvency Law Recognition Regime The only source currently codified into statute is the domestication of the UNCITRAL’s model recognition proceeding, which Japan has adopted as its recogni - tion and assistance regime of foreign insolvency pro - ceedings. As a result, a trustee, etc, who has a right to administer and dispose of a debtor’s property in a foreign insolvency proceeding may file a petition with a Tokyo district court for recognition of such foreign insolvency proceeding. Court’s Order of Recognition If the requirements are met (eg, the debtor has a busi - ness office, etc, in the country where such foreign insolvency proceeding is petitioned) and a decision to commence such foreign insolvency proceeding is made, the court shall issue an order of recognition.
The court shall dismiss with prejudice on the merits a petition in cases where: • it is obvious that the effect of the foreign insolvency proceeding does not extend to the debtor’s prop - erty in Japan; or • it is contrary to public policy in Japan to issue a disposition of assistance for the foreign insolvency proceeding, etc. The court may: • issue an order to stay other court proceedings (eg, a proceeding for compulsory execution); or • issue a disposition prohibiting a disposition of property, a disposition prohibiting payment, etc. No Blanket Recognition One important aspect of the Japanese version of the UNCITRAL model law is that it does not provide for a blanket recognition of a foreign insolvency proceed - ing and/or a restructuring plan confirmed thereunder. Specific assistance or recognition of specific remedy will need to be separately sought under the statute for the recognition and enforcement of foreign judgments. Recognition and Enforcement of Foreign Judgments If a foreign judgment satisfies all of the requirements below, Japanese courts will recognise the judgment without further determining the merits of the case. • The foreign judgment is a final and binding judg - ment rendered by a foreign court. • The jurisdiction of the foreign court is recognised pursuant to laws, treaties, etc. • The defeated defendant was properly served. • The content of the judgment and the litigation pro - ceedings is not contrary to public policy in Japan. • A guarantee of reciprocity is in place between the foreign jurisdiction and Japan. To enforce a foreign judgment in Japan, a creditor needs to file a petition to seek an “execution judg - ment”. An execution judgment will be made without investigating or adjudicating the merits of the case.
268 CHAMBERS.COM
Powered by FlippingBook