There are three types of insolvency proceedings under Japanese insolvency law:
- Bankruptcy - equivalent to liquidation; results in the company ceasing to trade. A bankruptcy administrator will be appointed to administer, realise and distribute the assets (or the proceeds of those assets) to the company’s creditors so as to satisfy, as far as possible, the company’s liabilities;
- Corporate Reorganisation - aim is to rescue the company and allow it to operate as a going concern. Only available for a stock company (kabushiki kaisha) and provides for a restructuring plan to be administered by a bankruptcy administrator appointed by the court; and
- Civil Rehabilitation - similar to corporate reorganisation but may be used for all corporations and provides for a rescue plan to be implemented by the company, in most cases debtor management remain in possession supervised by a court appointed supervisor.
In the following, we refer to the above three proceedings collectively as “insolvency proceedings”.
