Bankruptcy Act (Hasanshō Hō)
The Bankruptcy Act (Hasanshō Hō) governs corporate and personal bankruptcy proceedings in Japan. Enacted in 2004 to replace the 1922 law, the modern Bankruptcy Act introduced new procedures for corporate reorganisation and simplified bankruptcy proceedings. The Act establishes the framework for debtor in possession proceedings, liquidation, and creditor rehabilitation. It aims to facilitate the efficient resolution of insolvency while maximising value for creditors and providing debtors with a fresh start.
Legal area: Law governing the resolution of debtor insolvency and business restructuring.
Year enacted: 2004
Full text: https://elaws.e-gov.go.jp/document?lawid=japan-bankruptcy-act
Key Provisions
- Part I: General provisions (definitions, jurisdiction)
- Part II: Bankruptcy proceedings (commencement, debtor’s duties)
- Part III: Creditors’ rights (proof of claims, priority)
- Part IV: Bankruptcy estate (administration, avoidance actions)
- Part V: Common provisions (distribution, discharge)
- Part VI: Summary bankruptcy (simplified proceedings for small estates)
- Article 160: Avoidance of preferential payments
- Article 161: Avoidance of fraudulent acts
Significance
The 2004 Bankruptcy Act modernised Japan’s insolvency framework by introducing simplified procedures for small enterprises and individuals. The Act’s debtor in possession provisions allow distressed companies to continue operating during restructuring proceedings. Avoidance provisions allow trustees to claw back preferential and fraudulent transfers. The Act works alongside the Civil Rehabilitation Act and Corporate Reorganisation Act to provide a comprehensive insolvency framework.