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INTERNATIONAL INSOLVENCY INSTITUTESixteenth Annual International Insolvency ConferenceTokyo, Japan III NextGen Leadership Program and Class V InductionRESTRUCTURING SYSTEMS AND PROCEDURES INJAPANByAtaru IizukaTMI AssociatesTokyoJune 6-7, 2016?International Insolvency Institute 2016. All rights reserved.Restructuring in Japan: Its Current State and IssuesTMI AssociatesAtaru IizukaTable of Contents TOC \o "1-5" \h \z \u I. Preface PAGEREF _Toc450413256 \h 3II. Characteristics of Japan’s legal restructuring proceedings PAGEREF _Toc450413257 \h 31. To begin PAGEREF _Toc450413258 \h 32. Civil rehabilitation PAGEREF _Toc450413259 \h 4(1) Characteristics of civil rehabilitation PAGEREF _Toc450413260 \h 4(2) Summary of rehabilitation proceedings PAGEREF _Toc450413261 \h 5a. Petition PAGEREF _Toc450413262 \h 5b. Order of commencement PAGEREF _Toc450413263 \h 6c. Position of rehabilitation debtor PAGEREF _Toc450413264 \h 6d. Position of creditors PAGEREF _Toc450413265 \h 7(a) Classification of creditors and handling of rehabilitation claims PAGEREF _Toc450413266 \h 7(b) Handling of security interests PAGEREF _Toc450413267 \h 8(c) Creditors committee PAGEREF _Toc450413268 \h 8e. Property appraisal and report to the court PAGEREF _Toc450413269 \h 9f. Formulation of proposed rehabilitation plan PAGEREF _Toc450413270 \h 9g. Meeting of Creditors PAGEREF _Toc450413271 \h 10h. Order of confirmation by the court PAGEREF _Toc450413272 \h 103. Characteristics of corporate reorganization – Comparison with civil rehabilitation PAGEREF _Toc450413273 \h 11(1) “Kanri”-type PAGEREF _Toc450413274 \h 11a. Reorganization trustee PAGEREF _Toc450413275 \h 11b. Quasi-DIP-type corporate reorganization PAGEREF _Toc450413276 \h 11(2) A powerful proceeding that incorporates security interests PAGEREF _Toc450413277 \h 12(3) Characteristics of the reorganization plan PAGEREF _Toc450413278 \h 13a. Modification of rights PAGEREF _Toc450413279 \h 13b. Resolution requirements PAGEREF _Toc450413280 \h 13c. Provisions concerning restructuring PAGEREF _Toc450413281 \h 144. Which proceeding should be selected PAGEREF _Toc450413282 \h 14(1) Cases suitable for each proceeding PAGEREF _Toc450413283 \h 14(2) Case examples of Japan Airlines and Skymark PAGEREF _Toc450413284 \h 15a. Japan Airlines PAGEREF _Toc450413285 \h 15b. Skymark PAGEREF _Toc450413286 \h 165. Sufficient disclosure of information to secure transparency PAGEREF _Toc450413287 \h 17III. Use of institutionalized workout PAGEREF _Toc450413288 \h 191. Organization of institutionalized workout PAGEREF _Toc450413289 \h 192. Business Revitalization ADR PAGEREF _Toc450413290 \h 19(1) Purpose PAGEREF _Toc450413291 \h 19(2) Commencement PAGEREF _Toc450413292 \h 20(3) First creditors meeting (meeting to explain the summary of the proposed workout plan) PAGEREF _Toc450413293 \h 20(4) Formulation of the proposed workout plan PAGEREF _Toc450413294 \h 20(5) Second creditors meeting (meeting for consultation on the proposed workout plan) PAGEREF _Toc450413295 \h 21(6) Third creditors meeting (meeting for the resolution of the proposed workout plan) PAGEREF _Toc450413296 \h 21(7) Operation status PAGEREF _Toc450413297 \h 21IV. Introduction of the principle of majority rule to workout PAGEREF _Toc450413298 \h 221. Towards introducing the principle of majority rule PAGEREF _Toc450413299 \h 222. Workout models of various other countries PAGEREF _Toc450413300 \h 22(1) Models in which workout by the principle of majority rule is established PAGEREF _Toc450413301 \h 22a. Australia PAGEREF _Toc450413302 \h 22b. South Korea PAGEREF _Toc450413303 \h 22(2) Models where workout is established by the principle of majority rule and confirmation of the court PAGEREF _Toc450413304 \h 23a. England PAGEREF _Toc450413305 \h 23b. France PAGEREF _Toc450413306 \h 233. Introduction of the principle of majority rule in Japan PAGEREF _Toc450413307 \h 23(1) Introduction of two models PAGEREF _Toc450413308 \h 23(2) Considerations concerning indications of Constitutional violations PAGEREF _Toc450413309 \h 24V. Summary PAGEREF _Toc450413310 \h 25I. PrefaceAfter the bubble economy collapsed in 1990, Japan entered into a long-term economic depression, an era marked by weakened businesses resorting to bankruptcies. Since the original legal restructuring proceedings provided by the Composition Law and the old Corporate Reorganization Law were criticized for their inconvenience and inadequacy, the development of laws for bankruptcy and restructuring were accelerated. As a result, in the year 2000, the Composition Law was abolished and the Civil Rehabilitation Act was implemented. Soon after, in 2002, to replace the old Corporate Reorganization Law, the current Corporate Reorganization Act was legislated. Parallel with the development of the legal restructuring proceedings, the establishment of institutionalized out-of-court workout was advanced. This was because non-institutionalized workout was considered problematic due to the lack of clarity in its proceeding and the difficulty to ensure the reliability and fairness of the process. In 2001, the Guideline of Workout for restructuring debt was developed and in 2008, the Business Revitalization ADR (Alternative Dispute Resolution) was established based on the Guideline of Workout. The Business Revitalization ADR has been mainly utilized by big companies to date. Between 2000 and 2010, the restructuring proceedings were successively organized in this way and contributed to the revival of the Japanese economy.This paper will focus on restructuring in Japan and discuss the current state and issues in regards to both the legal proceeding and workout. It presents a summary of civil rehabilitation (II.2), followed by an explanation of corporate reorganization, highlighting how the latter proceeding differs from the former (II.3). Specific examples will be introduced thereafter (II.4), and I will briefly discuss the relevant issue of insufficient information disclosure (II.5). Thereupon, institutionalized out-of-court workout will be introduced (III). Lastly, I will discuss the introduction of the principle of majority rule to workout (IV).II. Characteristics of Japan’s legal restructuring proceedings1. To beginIn Japan, there are two legal restructuring proceedings called civil rehabilitation and corporate reorganization Civil rehabilitation is the proceeding conducted under the Civil Rehabilitation Act. It is a Debtor-In-Possession-type (DIP-type) proceeding where restructuring is advanced by the initiative of the debtor. It enables a speedy and flexible legal restructuring. In contrast, corporate reorganization is the proceeding conducted under the Corporate Reorganization Act. It is a Kanri-type (administration-type) proceeding, where the court appoints a trustee under whose control and initiative the proceeding advances, and is a powerful and strict proceeding.While both are legal restructuring proceedings and have many points in common, since there are also greatly differing points, a lawyer considering a petition for the legal restructuring proceedings has to ascertain the nature of the case and consider which proceeding is optimal. However, in actual operations, civil rehabilitation is used in overwhelmingly more cases, as in the below chart. 2. Civil rehabilitation(1) Characteristics of civil rehabilitationCivil rehabilitation affords businesses the opportunity to execute a restructuring process characterized by 3 main features, namely, (i) a DIP-type proceeding, (ii) speedy restructuring, and (iii) limited involvement of interested parties such as security interest holders.First, the debtor, even after the proceeding has been commenced, holds the right to carry out its business and administer and dispose of its property (Civil Rehabilitation Act, Article 38(1)) and can pursue restructuring while maintaining its management right. This becomes an incentive for a debtor to petition for civil rehabilitation at a relatively early stage. Second, civil rehabilitation enables speedy restructuring. The Tokyo District Court may issue an order of commencement about one week from the petition; the deadline for filing proofs of claims is set approximately one month after the order of commencement, the submission deadlines of the property appraisal and draft proposed plan are fixed approximately two months from the order of commencement, the claim examination period is approximately two and a half months from the order of commencement, and the submission deadline of the proposed plan is designated approximately three months from the petition. And since the meeting of creditors to resolve the proposed plan is held approximately five months from the petition, speedy restructuring becomes possible.Third, the involvement of interested parties is limited to expedite the process. Although general creditors are obligated to participate in the proceeding as rehabilitation creditors (Civil Rehabilitation Act, Article 84 and 85(1)), holders of common benefit claims and creditors with general priorities may receive payment at any time without going through the proceedings (Civil Rehabilitation Act, Article 121(1) and 122(2)), security interest holders may exercise rights without going through the proceedings as holders of rights of separate satisfaction (Civil Rehabilitation Act, Article 53(2)). In addition, shareholders would never participate in the proceedings as interested parties. By limiting the involvement in the proceedings by interested parties in this way, civil rehabilitation makes possible simplifying and speedily advancing the proceedings.(2) Summary of rehabilitation proceedingsIn the following, the summary of rehabilitation proceedings will be explained, which proceeds, generally, in the flow of petition order of commencement filing proofs of claims submission of property appraisal and draft proposed plan approval or disapproval of claim and investigation of claim submission of proposed plan resolution by creditors meeting order of confirmation or disconfirmationa. PetitionRehabilitation proceedings are commenced by a petition of a debtor or creditor (Civil Rehabilitation Act, Article 21). Normally, court jurisdiction is determined by the debtor’s principal place of business or address. When a petition for rehabilitation proceedings is filed, the court normally issues a temporary restraining order to prohibit payments by the debtor (Civil Rehabilitation Act, Article 30(1)). If there is a further need, the court issues individual stay orders ordering the stay of compulsory executions, provisional attachments, provisional dispositions, etc. against rehabilitation claims, and if there are special circumstances, it issues a comprehensive prohibition order ordering the prohibition of compulsory executions, etc. against all rehabilitation creditors (Civil Rehabilitation Act, Article 26(1) and 27(1)). Furthermore, if there is a need, the court can issue a stay order on the proceedings for the exercise of security interests under strict requirements (Civil Rehabilitation Act, Article 31).In addition, in the operation of the Tokyo District Court, a supervision order is normally issued at the same time as the temporary restraining order, and a supervisor is appointed. The supervisor is to supervise the performance of the proceedings and rehabilitation plan by the rehabilitation debtor, and the debtor is unable to conduct certain acts without obtaining the consent of the supervisor (Civil Rehabilitation Act, Article 54 and 186(2)).b. Order of commencementThe court considers the contents of the petition and issues an order of commencement if the grounds for commencement can be found (Civil Rehabilitation Act, Article 33). The grounds for commencement are as follows: (i) if there is a risk that a fact constituting the grounds for commencement of bankruptcy proceedings would occur to a debtor, or (ii) if the debtor is unable to pay his/her debts that are due without causing significant hindrance to the continuation of his/her business (Civil Rehabilitation Act, Article 21(1)). The risk that the inability to pay debts will occur or the risk that insolvency will occur will correspond to (i). And, (ii) means economic conditions where the cash flow fails and the continuation of business would become impossible if payments are continued as-is.As the effect of the order of commencement, (i) the payment of rehabilitation claims are prohibited, (ii) the execution of compulsory executions, provisional attachments, provisional dispositions, etc. against the rehabilitation debtor’s property is prohibited, and are stayed if they are already ongoing, and (iii) actions concerning the rehabilitation claims are discontinued (Civil Rehabilitation Act, Article 85(1), 39 and 40).Moreover, in regards to the prohibition of payments, when rehabilitation proceedings can be advanced smoothly by making prompt payments of small sums of rehabilitation claims, or if there would be significant hindrance to the continuation of rehabilitation debtor’s business unless prompt payments are made on small sums of rehabilitation claims, payment of such rehabilitation claims is allowed even after the commencement of rehabilitation proceedings, subject to the court’s permission (Civil Rehabilitation Act, Article 85(5)). In addition, with respect to small- or medium-size enterprise whose major trading partner is the rehabilitation debtor, when it is likely that there will be significant hindrance to continuing its business unless it receives payment of its claim (such as if there is the likelihood of causing chain bankruptcies), payment will be allowed even after the commencement of rehabilitation proceedings, subject to the court’s permission(Civil Rehabilitation Act, Article 85(2)).c. Position of rehabilitation debtorCivil rehabilitation is DIP-type, and, in general, a rehabilitation debtor continues to have the right to administer and dispose of property and the right to execute business even after the order of commencement.Moreover, a duty of fairness and good faith to the creditors is imposed on the rehabilitation debtor (Civil Rehabilitation Act, Article 38(2)). In order for the rehabilitation debtor to conduct certain acts (disposition and acceptance of property, borrowing money, filing actions, settling, redemption of collateral for a right of separate satisfaction, waiver of rights, etc.) after the order of commencement, the court’s permission or the supervisor’s consent, if a supervisor has been appointed, must be obtained, and rehabilitation proceedings will proceed under the supervision of the court and supervisor (Civil Rehabilitation Act, Article 41).In addition, if there is a need for the reorganization of business, a rehabilitation debtor can transfer its business by obtaining the court’s permission, without going through a rehabilitation plan, after the order of commencement (Article 42 and 43), and it is used as a system that makes possible the speedy transfer of business.d. Position of creditors(a) Classification of creditors and handling of rehabilitation claimsIn rehabilitation proceedings, claims are classified into common benefit claims, claims with general priorities and rehabilitation claims.While common benefit claims and claims with general priorities are paid at any time without going through rehabilitation proceedings, rehabilitation claims are paid only pursuant to the rehabilitation plan.Specifically, common benefit claims are claims that occur after the commencement of rehabilitation proceedings and are claims that would become benefits to rehabilitation creditors in general, and are paid at any time without going through rehabilitation proceedings (Civil Rehabilitation Act, Article 119). In addition, claims with general priorities are claims for which general statutory liens or other general priority exist (such as labor claims and tax claims), and these are also paid at any time without going through rehabilitation proceedings (Civil Rehabilitation Act, Article 122).Compared to this, rehabilitation claims are claims on property arising against the rehabilitation debtor from a cause that has occurred before the commencement of rehabilitation proceedings and payments are prohibited by the order of commencement (Civil Rehabilitation Act, Article 84 and 85(1)). Rehabilitation creditors are included in the rehabilitation proceedings and cannot receive payments unless they are through the rehabilitation plan. Furthermore, interest and delay damages are rehabilitation claims, but their voting rights are denied and subordinate treatment is possible (Civil Rehabilitation Act, Article 84(2) and 87(2)).In this way, rehabilitation claims are included in the proceedings. And rehabilitation creditors who attempt to participate in the proceedings must file its own content of claims, cause, amount of voting right, the estimated amount of deficiency, etc. within the period for filing a proofs of claims set forth in the order of commencement (Civil Rehabilitation Act, Article 94(1)).Having received this, the rehabilitation debtor, etc. is to prepare a statement of approval or disapproval of claim (Civil Rehabilitation Act, Article 101). This will be approved by the rehabilitation debtor, etc. within the period of investigating the claims, and rehabilitation claims for which there were no objections from the holders of filed rehabilitation claims will be determined as filed. On the other hand, a petition for assessment of the rehabilitation claim may be filed for claims that were not approved by the rehabilitation debtor and other claims for which there were objections from rehabilitation creditors (Civil Rehabilitation Act, Article 105), and the contents of the claims will be determined after going through the assessment proceeding. (b) Handling of security interestsAs one of the characteristics of rehabilitation proceedings, security interests are not included in rehabilitation proceedings.Specifically, security interests such as mortgages, special statutory liens and pledges, are treated as rights of separate satisfaction, and since they are not included in the rehabilitation proceedings, a holder of the right of separate satisfaction can exercise the right of separate satisfaction without going through rehabilitation proceedings (Civil Rehabilitation Act, Article 53). Moreover, since it would be problematic if security rights are exercised with respect to property that is essential for continuing business, an order to stay the exercise can be issued (Civil Rehabilitation Act, Article 31) and there is a provision to forcibly extinguish security rights by way of payment amounting to the equivalent value of the object of the security interest (claim to extinguish security interests) (Civil Rehabilitation Act, Article 148).In practice, if a security interest is established on property that is essential for the continuation of business, the debtor’s attorneys must first negotiate with the holder of the right of separate satisfaction and enable as much as possible the continuation of the use of the property by establishing a separate agreement, and if the negotiation fails, the system of claiming the extinguishment of the security interests will be used.(c) Creditors committeeCreditors may form a creditors committee. The requirements are: (i) the number of members is three or more and ten or fewer (Ordinance for Enforcement of Civil Rehabilitation Act, Article 52); (ii) the majority of rehabilitation creditors have consented to the committee participating in the proceedings; and (iii) the committee can be recognized to properly represent the interests of all of the rehabilitation creditors (Civil Rehabilitation Act, Article 117(1)).If a creditors committee is formed, it may (i) state opinions to the court, the rehabilitation debtor, etc. or the supervisor, and (ii) the court may also seek a statement of the opinion of the committee if there is a need. In addition, it is provided that (iii) the rehabilitation debtor, etc. must always hear the opinions from the creditors committee in regards to the administration of business and property of the rehabilitation debtor, (iv) if the rehabilitation debtor, etc. submits reports and financial statements to the court, they must also be submitted to the creditors committee, and (v) when necessary for the interests of all of the rehabilitation creditors, the creditors committee may make a request to the court for an order for a report by the rehabilitation debtor, etc. regarding the status of administration of the rehabilitation debtor’s business and property (Civil Rehabilitation Act, Article 117, 118-1, 118-2 and 118-3).However, in actuality, the creditors committee is hardly ever utilized since it is difficult to fulfill requirements for its formation and the strong legal effect is not given to a creditors committee if it is formed. Furthermore, in the event such a committee is organized, it is not always possible to obtain reimbursement of expenses accrued by the creditors committee.e. Property appraisal and report to the courtThe rehabilitation debtor, etc. must appraise the value of all its properties at the time of the commencement of rehabilitation proceedings without delay after such commencement (Civil Rehabilitation Act, Article 124(1)). One purpose of conducting such property appraisal is to make it a reference for the rehabilitation creditors when they exercise its voting rights in the creditors meeting, by comparing with the liquidating distributions and payments in the rehabilitation plan. Additionally, it is used by the court for decision-making in the approval process of the rehabilitation plan. If a property appraisal is conducted, the rehabilitation debtor, etc. must immediately thereafter prepare an inventory of assets and balance sheets and submit them to the court (Civil Rehabilitation Act, Article 124(2)).In addition, the rehabilitation debtor, etc. must submit a written report to the court without delay after the commencement of rehabilitation proceedings. The circumstances that have resulted in such commencement, the past and existing status of the rehabilitation debtor’s business and property, and other necessary matters must be stated in such written report (Civil Rehabilitation Act, Article 125).Furthermore, the rehabilitation debtor is normally required to report to the court every month on the status of administration of the rehabilitation debtor, etc.’s business and property. f. Formulation of proposed rehabilitation planThe rehabilitation debtor, etc. is to prepare a proposed rehabilitation plan and submit it to the court within the period provided by the court after the expiration of the period for filing the proofs of claims, by taking into consideration the property appraisal and investigation of claims (Civil Rehabilitation Act, Article 163(1)).Provisions to modify the rights of rehabilitation creditors, provisions concerning payment of common benefit claims and claims with general priorities and provisions indicating the contents of claims after commencement must be provided in the proposed rehabilitation plan (Civil Rehabilitation Act, Article 154(1)). The general rule is that the contents of the modification of the rights by the rehabilitation plan must be equal between the rehabilitation creditors (Civil Rehabilitation Act, Article 155(1)). In addition, if the term for a debt is to be extended, as a general rule, the term is limited to 10 years from the determination of the order of confirmation of the plan (Civil Rehabilitation Act, Article 155(3)).Besides the provisions for the modification of rights, provisions concerning the acquisition of shares of rehabilitation debtor according to the provisions of the rehabilitation plan, provisions concerning the consolidation of shares, provisions concerning the reduction of capital, etc. can be set forth in the proposed rehabilitation plan upon obtaining the permission of the court (Civil Rehabilitation Act, Article 154(3)). In addition, provisions concerning solicitation of subscribers for shares for subscription can be set forth with respect to closed companies (companies with restrictions on the transfer of shares) upon obtaining the permission of the court (Civil Rehabilitation Act, Article 154(4)).g. Meeting of CreditorsWhen a proposed rehabilitation plan is submitted, it is referred to a resolution by the decision of the court, and in the meeting of creditors, if (i) the approval of a majority of the voting right holders present and (ii) the approval of one-half or more of the total voting rights of the voting right holders is obtained, the proposed rehabilitation plan is approved (Civil Rehabilitation Act, Article 172-3(1)). Furthermore, the method of exercising a voting right by voting by document is allowed (Civil Rehabilitation Act, Article 169(2)(ii)).h. Order of confirmation by the courtIf a proposed rehabilitation plan is approved by the meeting of creditors or by the method of exercising a voting right by voting by document, the court will give an order of confirmation as long as there are no reasons for disconfirmation (Civil Rehabilitation Act, Article 174). For example, an instance where there is incompatibility with the general interests of the rehabilitation creditors of the rehabilitation plan, and, specifically, where liquidation value is not guaranteed would be a reason for disconfirmation.The proposed rehabilitation plan becomes effective when the order of confirmation becomes final and binding (Civil Rehabilitation Act, Article 176) and the contents of the claims for filed rehabilitation claims are amended pursuant to the provisions of the rehabilitation plan, and the rehabilitation debtor will, in principle, be discharged for the liabilities, except for the rights approved by the rehabilitation plan (Civil Rehabilitation Act, Article 178).3. Characteristics of corporate reorganization – Comparison with civil rehabilitationCompared to civil rehabilitation as in the above, corporate reorganization has characteristics such as (i) being “Kanri”-type (administration-type), (ii) being a powerful proceeding where security interests can be included in the proceeding, and (iii) there being various methods including organizational restructuring in the reorganization plan.(1) “Kanri”-typea. Reorganization trustee In corporate reorganization, the reorganization trustee (the “Trustee”) is a mandatorily required institution (Corporate Reorganization Act, Article 42(1)), and the Trustee that is appointed by the court has the authority to manage business and administer and dispose of property for the reorganization company, while fairly advancing the proceedings, under the supervision of the court (Corporate Reorganization Act, Article 72(1)). Since corporate reorganization, compared to civil rehabilitation, is a powerful proceeding that includes the security interest holder, Kanri-type (administration-type), rather than DIP-type, is taken. While the Trustee has strong authority, it bears the duty of due care of a prudent manager (Corporate Reorganization Act, Article 80) and bears the duty not to compete (Corporate Reorganization Act, Article 79).When a petition for reorganization proceeding is filed, in many instances, a provisional administration order is issued at the same time as the petition. In general, the proceeding will be advanced until the issuance of the order of commencement in the form of the provisional administrator appointed from the attorneys controlling the full power of business. Thereafter, when the order of commencement is issued, the provisional administrator as-is is often appointed as Trustee. Furthermore, in large-scale reorganization cases, a legal Trustee whose main duty is the administration of property and formulating the reorganization plan and a business Trustee whose duty is to manage the business are often appointed.b. Quasi-DIP-type corporate reorganizationEven in corporate reorganization, in certain instances, a manager such as a director of the reorganization company can be appointed as Trustee, which is called quasi-DIP-type. In the past, there were not many cases where corporate reorganization was used, and one of the causes thereof was that seeking the use of corporate reorganization that changed management involved significant difficulty since managers would try to find ways for the company to continue under the current management until the end.The 8th Civil Division of the Tokyo District Court presented the requirements for the quasi-DIP-type corporate reorganization, namely: (i) there are no illegal management responsibility issues such as wrongful acts among the current management; (ii) the main creditor is not opposed to the current management’s involvement in managing; (iii) if there is someone who is to be a sponsor, then there is the understanding of such person; and (iv) there are no recognized circumstances that would cause the loss of the proper execution of corporate reorganization by the current management’s involvement in managing.However, there have been only 25 cases of petitions for the quasi-DIP-type Corporate Reorganization by the end of 2015.(2) A powerful proceeding that incorporates security interestsAs a second characteristic, in corporate reorganization, the security interest holders are included in the proceedings as secured reorganization creditors. Specifically, even a secured reorganization claim becomes subject to a prohibition of payment due to the order of commencement of reorganization proceedings (Corporate Reorganization Act, Article 47(1)), and the exercise of security interests based thereon are prohibited or stayed (Corporate Reorganization Act, Article 50(1)). A secured reorganization claim also becomes subject to the modification of rights according to the reorganization plan (Article 167) and the secured reorganization creditors come to receive payment under the reorganization plan. Also, there is a system for the extinguishment of security interests even in corporate reorganization, similar to civil rehabilitation (Corporate Reorganization Act, Article 104(1)).In addition, with respect to tax claims, a part will be protected as a common benefit claim but the remaining part will be a reorganization claim (Corporate Reorganization Act, Article 129). However, since the priority of tax claims is recognized under substantive law, it is treated as a priority reorganization claim. If it is delinquent, it will receive a disposition of delinquency, but a disposition of delinquency will as a matter of course be restricted, such as becoming subject to a prohibition or stay, after the commencement of reorganization proceedings (Corporate Reorganization Act, Article 50).Furthermore, shareholders are also included in the proceedings in Corporate Reorganization, and shareholders can participate in the proceeding with the shares they have (Corporate Reorganization Act, Article 165). However, when it is not in a state of insolvency, the shareholders will have one voting right for one share (Corporate Reorganization Act, Article 166(1)), and if it is in a state of insolvency, the shareholders do not have voting rights and their rights are greatly limited (Corporate Reorganization Act, Article 166(2)).(3) Characteristics of the reorganization plana. Modification of rightsIn the proposed reorganization plan, provisions for the modification of rights must be set forth (Corporate Reorganization Act, Article 167(1)). Since various interested parties are subject to the reorganization proceedings, divisions into groups are made between rights holders of different classes such as secured reorganization claims, priority reorganization claims, general reorganization claims, consensually-subordinated reorganization claims, preferred shares and common shares, and modification of rights is provided with respect to each group(Corporate Reorganization Act, Article 168(1)). Among those who have rights of different classes, fair and equal differences must be set by taking into consideration the priority of each under substantive law (Corporate Reorganization Act, Article 168(3)).b. Resolution requirementsThe resolution for the proposed reorganization plan is, in principle, made by the group of the rights holders of different classes, but the court can consolidate or split each group at its discretion (Corporate Reorganization Act, Article 196(1) and (2)). The requirements for approval are: (i) with respect to reorganization creditors, the consent of one-half of the total amount of voting rights is required; (ii) with respect to secured organization claims, a) the consent of two-thirds or more of the total amount of voting rights for the extension of the term, b) the consent of three-fourths or more for the modification of rights such as extinguishment, and c) the consent of nine-tenths or more for steps for liquidation-type proposed reorganization plan, are required; and (iii) with respect to shareholders, the consent of a majority of the total number of voting rights is required (however, voting rights are not recognized in the event of insolvency) (Corporate Reorganization Act, Article 196(5)).Compared with civil rehabilitation, corporate reorganization does not necessitate a head-count. It does, however, require the supermajority approval of the security interest holders.c. Provisions concerning restructuringIn the proposed reorganization plan, various provisions concerning organizational restructuring can be provided as contents of the proposed reorganization plan, and it is possible to realize various organizational restructuring in the proceedings.For example, it will be possible to provide in the proposed reorganization plan the acquisition of shares (Corporate Reorganization Act, Article 174-2), issuance of shares for subscription (Corporate Reorganization Act, Article 175), issuance of share options for subscription (Corporate Reorganization Act, Article 176), issuance of bonds for subscription (Corporate Reorganization Act, Article 177), dead equity swap (Corporate Reorganization Act, Article 177-2), dissolution (Corporate Reorganization Act, Article 178), entity conversion into a membership company (Corporate Reorganization Act, Article 179), merger (Corporate Reorganization Act, Article 180 and 181), split (Corporate Reorganization Act, Article 182 and 182-2), share exchange (Corporate Reorganization Act, Article 182-3), share transfer (Corporate Reorganization Act, Article 182-4), incorporation of a new company (Corporate Reorganization Act, Article 183), etc.4. Which proceeding should be selected(1) Cases suitable for each proceedingSince corporate reorganization has the above characteristics, it is used if the negotiation with the security interest holders is difficult and they need to be included in the proceedings. Additionally, it is used if there is no prospect of the creditors’ consent with a DIP-type restructuring because the representative is engaged in illegal acts such as fraudulent accounting, or if organizational restructuring is necessary in the proceedings. Furthermore, in large cases where there are multiple interested parties, since stability of the proceedings is strongly sought, the more strict and powerful corporate reorganization tends to be pared to this, if instances that do not correspond to the above or speedy restructuring is necessary, civil rehabilitation is used.However, in practice, as explained in II.1 above, civil rehabilitation is used overwhelmingly more often. This is due to reasons such as the managers finding the DIP-type proceedings to be more appealing, corporate reorganization taking significant time, cost and efforts due to its strictness despite of the existence of the quasi-DIP type corporate reorganization. In addition, the reason is that, compared with civil rehabilitation, traditionally the hurdles in filing the petition and obtaining the order of commencement from the court in corporate reorganization are high since the probability of the success of restructuring is required for the court to order the commencement.In recent well-known cases, among airline companies, Japan Airlines filed for corporate reorganization, while Skymark filed for civil rehabilitation. Among shipping companies, Sanko Line and Rams Corporation filed for corporate reorganization, while Daiichi Chuo Kisen filed for civil rehabilitation. Lehman Brothers Japan, which brought about world-wide financial instability, filed for civil rehabilitation.(2) Case examples of Japan Airlines and SkymarkThe case examples of Japan Airlines and Skymark will be touched upon below, and the reasons why each of the proceeding was selected will be explored.Japan Airlines is a well-known and worldwide airline company. On the other hand, Skymark is a middle-sized and domestic airline company, which is providing flight at a lower price than Japan Airlines and All Nippon Air.a. Japan AirlinesJapan Airlines filed a petition for the commencement of corporate reorganization in the Tokyo District Court on January 19, 2010, and received an order of commencement thereof on the same day. The Enterprise Turnaround Initiative Corporation of Japan (ETIC) and a well-known attorney in the area of restructuring were appointed as the trustee. In addition, Japan Airlines had applied for reorganization support to ETIC prior to the petition, and on the same day, ETIC received a decision to support therefrom. At the time of the petition, Japan Airlines’ total liabilities were 2.7 trillion yen.When corporate reorganization is filed, the reorganization company will no longer be able to make payments, including commercial debts which were incurred through the business transactions. However, in the case of Japan Airlines, the payments were made upon obtaining the court’s permission as all of the commercial debts would correspond to “where significant hindrance would be caused to the continuation of the reorganization company’s business unless a small reorganization claim, etc. is paid promptly.” (Corporate Reorganization Act, Article 47(5))The proceeding of Japan Airlines advanced under the Trustee, and a proposed reorganization plan was submitted to the Tokyo District Court on August 31, 2010. In the proposed reorganization plan provided that: (i) as corporate reorganization, i) Japan Airlines, Japan Airlines International and Japan Capital would merge with Japan Airlines being the surviving company, ii) the outstanding shares would be acquired without consideration and they would all be cancelled, and iii) payment of 350 billion yen would be received from ETIC and shares would be issued; (ii) the payment rates for reorganization claims would be the same for the three companies; (iii) secured reorganization claims would be paid in seven-year installment payments for the entire amount of the finalized secured reorganization claim amount (advance lump-sum payment possible); and (iv) a release of 87.5% of the finalized claim amount for general reorganization claims was received (12.5% payment rate) and would be paid on a seven-year installment payments (advance lump-sum payment possible).A vote by the creditors was held with respect to such proposed reorganization plan and the consent from 96% or more of multiple creditors was obtained, and an order of confirmation was issued by the Tokyo District Court on November 30, 2010. Thereafter, Japan Airlines executed a lump-sum payment by procuring funds from a total of 11 financial institutions for reorganization claims, and on March 28, 2011, it received an order for conclusion of the reorganization proceeding from the Tokyo District Court. Furthermore, Japan Airlines achieved relisting in September 2012.The reasons why Japan Airlines chose corporate reorganization was because there were an extremely large number of interested parties in and outside Japan and the total amount of liabilities including financial liabilities was an enormous amount, there was a need to conduct a large-scale corporate reorganization that included a merger during the proceeding, and, moreover, a strict, fair and stable proceeding of corporate reorganization was necessary in order for the retructuring to be ensured.b. SkymarkSkymark filed a petition for the commencement of civil rehabilitation on January 28, 2015, and on the same day, the Tokyo District Court issued a temporary restraining order to prohibit payment and a supervisor was appointed. Skymark’s total liabilities at the time of the petition were 71.088 billion yen.Skymark obtained an order of commencement from the Tokyo District Court on February 4, 2015, and Skymark proceeded with the proceeding and submitted a proposed rehabilitation plan to the Tokyo District Court on May 29, 2015. In Skymark’s proposed rehabilitation plan, 5% and additional payments were to be made to the rehabilitation creditors with Integral Corporation and ANA Holdings INC. as sponsors (provided that the entire amounts would be paid for parts that were 1 million yen or less).What was characteristic in Skymark’s proceeding was that, while Skymark itself submitted a proposed rehabilitation plan, Intrepid Aircraft Leasing LLC (“Intrepid”) also submitted a proposed rehabilitation plan on the same day. This was because Intrepid, which was the largest rehabilitation creditor, was opposed to the proposed rehabilitation plan wherein ANA Holdings would be a sponsor.In this way, there were two competing proposed rehabilitation plans, but ultimately, at the meeting of creditors held on August 5, 2015, Skymark’s proposed rehabilitation plan was approved by obtaining the approval of 135 and a half from among 174 people (headcount requirement) and the approval of 60.25% of the total amount of voting rights of voting right holders, and such proposed plan received an order of confirmation from the Tokyo District Court on the same day.Thereafter, Skymark completed all of its payments under the proposed rehabilitation plan by March 28, 2016 (the final payment rate including additional payments was approximately 10.38%), and on the same day, received an order for conclusion of the proceeding from the Tokyo District Court.In the Skymark case, the period from the petition to the order of confirmation for the proposed rehabilitation plan was a little more than six months and the period from the petition until the conclusion of the proceeding was approximately one year and two months, and the restructuring proceeded rather quickly. It can be inferred that the reason Skymark chose civil rehabilitation was that compared to Japan Airlines, there were not as various interested parties and its scale of liabilities was small, and that it was of utmost importance to aim for speedy restructuring in order to avoid damages to the business.5. Sufficient disclosure of information to secure transparencyHere, I would like to shed some light on one of the issues of legal restructuring in Japan, namely the insufficiency of information disclosure.In order to maintain confidence of interested parties towards legal restructuring proceedings, it is extremely important to aim for the transparency of the proceedings by sufficiently disclosing information. However, in Japan, there are times when the disclosure of information in legal restructuring proceedings is insufficient. As greater internationalization ensues, cases involving foreign investors increase, consequently casting more attention to the fact that pertinent information is not sufficiently being disclosed to creditors in Japan. This is especially glaring when compared to procedures in the US.Indeed, in the legal restructurings in Japan, interested parties such as creditors can request to view the documents submitted to or prepared by the court (Civil Rehabilitation Act, Article 16(1); Corporate Reorganization Act, Article 11(1)). They include a petition, various court orders and decisions, confirmations, proofs of claims, statements of approval or disapproval and various reports submitted by the rehabilitation debtor, etc. (civil rehabilitation) or the Trustees (corporate reorganization).However, access to the above information can be restricted with respect to parts that would cause significant hindrance to the maintenance and restructuring of debtor’s business or would cause significant damage to debtor’s property due to the interested party’s access and copying (Civil Rehabilitation Act, Article 17; Corporate Reorganization Act, Article 12). In practice, rehabilitation debtor, etc. or Trustees have used restrictions on accessing, for example, in such instances where there is a need to protect trade secrets or if the selection of sponsors is advanced in secret when sponsors are to be selected. In addition, there are instances where the stated contents are not complete, and there are issues where sufficient information cannot be obtained from the disclosure of the above documents.Moreover, if a creditors committee is formed, it can make a request to the court for an order for reports of the rehabilitation debtor, etc. with respect to the administration status of the rehabilitation debtor’s business and property, and a complete disclosure of information can be expected, but the actual situation is that the creditors committee is hardly pared to this, in Chapter 11 of the US, an adversary system is ensured, and a system is sufficiently in place for the disclosure of information in order to secure this. In addition, a creditors committee is granted authority to investigate financial condition of the debtor and the operation of the debtor’s business (11 U.S.C. §1103). Furthermore, a disclosure system through the court’s website called PACER (Public Access to Court Electronic Record) has been developed, and the records of the proceedings can be easily accessed on this website. In this way, since there is a large difference between Japan and the US in the degree of information disclosure to creditors, foreign creditors would feel that the information disclosure stage is not sufficiently secured in Japan.If excessive authority is granted to creditors, it cannot be denied that such would become a hindrance to restructuring, but unless sufficient information disclosure can be made, transparency of the proceedings cannot be secured. Therefore, fairness and reliability cannot be maintained.In light of the above, in legal restructuring proceedings in Japan, there is a need to further strengthen information disclosures to creditors.III. Use of institutionalized workout1. Organization of institutionalized workoutThe rules for legal restructuring proceedings are clearly provided and they are stable, fair and impartial since the court supervises it. However, when they are commenced, since that fact is publicized and the debtor will be labeled as a bankrupt company, the debtor’s business value becomes greatly pared to this, in a pure (non-institutionalized) out-of-court workout, face-to-face negotiations between the debtor and the creditors are advanced in secret, and if an agreement is reached between the parties, the content of the agreement comes into force. Therefore, how the workout will proceed is left to the parties’ discretion, thereby facilitating a flexible and speedy resolution. More importantly, since commercial creditors will not be brought in, there is little damage to business value. However, since there are no clear rules, it is unstable as a proceeding and oftentimes the trust of creditors cannot be obtained.In order to make use of the advantages of both proceedings, the institutionalized workout proceedings were therefore established. They are stabilized by the participation of fair and neutral third party, and since it is advanced with just the financial creditors as the other party, there is little damage to business value; the process can move forward flexibly and quickly. As a representative example of institutionalized workout proceedings, Business Revitalization ADR is introduced here.2. Business Revitalization ADR(1) PurposeBusiness Revitalization ADR is regulated by the Act on Promotion of Use of Alternative Dispute Resolution and the Act on Special Measures for Industrial Revitalization, and it is an out-of-court workout that is executed by the specified ADR business operator that has met the requirements of the regulations of such procedures. Currently, only the Japanese Association of Turnaround Professionals (the “Association”) has received certification as a specified certified dispute resolution business operator, and has commenced activities in 2008.Its purpose is to conduct adjustments to the debt/credit relationship between the debtor and the financial creditors without relying on legal proceedings in business fields where it is likely that business value will be significantly harmed and would cause hindrance to restructuring if legal proceedings are relied on.(2) CommencementThe Association accepts consultations in advance. After it assesses the suitability of the case, it provisionally accepts applications and appoints the expected dispute resolution provider(s). Then the expected dispute resolution provider(s) will conduct investigation, and the debtor will prepare for the official application. The dispute resolution provider(s) is appointed from restructuring specialists.A significant amount of work needs to be accomplished before the actual commencement, and the outline of the proposed workout plan is pretty much settled before the official application.The procedure commences once the Association accepts the official application by the debtor, and the Association and the debtor issue under both their names a notice for a temporary stay which contains a prohibition of the collection of claims. It is issued against the creditors who are comprised basically of financial creditors.After the commencement, a total of three creditors meetings are held. They are held non-publicly and only the creditors receiving service of the temporary stay participate. The first creditors meeting is held within two weeks from the notice of temporary stay. Normally, the second meeting is set for about one and a half to two months from the first meeting, and the third meeting is set for about one month after the second meeting.(3) First creditors meeting (meeting to explain the summary of the proposed workout plan)At the first meeting, the debtor explains the current status of assets and liabilities and the summary of the proposed workout plan, and in consideration thereof, questions are asked and answered and the creditors exchange opinions. In addition, resolutions are made for the appointment of a chairman and the dispute resolution provider(s), the specific contents and period of the temporary stay, and the date and location of the following creditors meetings.Normally, in the initial notice, the temporary stay is effective until the first meeting, but after going through a resolution, the validity period is extended until the third meeting.(4) Formulation of the proposed workout planThe debtor is required to explain the summary of the proposed workout plan to the first meeting. Revisions to the proposed plan can be made thereafter, but the deadline for revisions must be set and the plan must be completed before the second meeting.In the plan, it is necessary to state (i) the cause of business difficulties, (ii) means for business restructuring, (iii) measures for equity capital adequacy, (iv) matters concerning the prospects of assets, liabilities, profits and expenses, (v) a plan concerning fund procurement, (vi) a plan concerning the performance of obligations, (vii) modification of the creditors’ rights, and (viii) the prospected amount of the claim to be collected.In addition, the proposed plan is required to (i) eliminate the state of insolvency within three years, (ii) make a business surplus arise within three years, (iii) modify the creditors’ rights equally and equitably, and (iv) ensure the economic reasonableness.Moreover, if the proposed plan involves a debt waiver, asset evaluation must be conducted in accordance with the standards specified by the Minister of Economy, Trade and Industry, and a balance sheet must be prepared based on the value obtained through the said asset evaluation. Furthermore, the extinguishment of part or all of the shareholders' rights and resignation of officers are required unless such extinguishment or resignation is likely to cause significant hindrance to the business revitalization.In this way, the requirements for a proposed plan are strictly incorporated into rules.(5) Second creditors meeting (meeting for consultation on the proposed workout plan)Before the second meeting, the dispute resolution provider(s) must prepare documented opinions as to whether the proposed plan is lawful, fair and equitable, rational, feasible and economically reasonable (the report is submitted to the creditors prior to the second meeting).At the second meeting, the debtor explains any revisions of the proposed plan, and the dispute resolution provider(s) reports on the opinions. Receiving such opinions, questions are asked and answered and the creditors exchange opinions.In this way, since an investigation of the proposed plan will be conducted by a dispute resolution provider(s), a fair and neutral third party, the fairness and equity are secured.(6) Third creditors meeting (meeting for the resolution of the proposed workout plan)The creditors consider whether to consent to the proposed plan by considering the opions submitted by the dispute resolution provider(s) by the third meeting. At the third meeting, a resolution is made as to whether to consent to the proposed plan. If all of the creditors consent, the proposed plan becomes effective and thus binding the creditors. On the other hand, if even one creditor withholds consent, the workout is not established.(7) Operation statusSince the commencement of operations in 2008, 184 companies (of which 21 were listed companies) have applied for Business Revitalization ADR by 2013.Japan Airlines, which was described above, initially applied to use Business Revitalization ADR while receiving support from ETIC, but came to file for corporate reorganization thereafter. IV. Introduction of the principle of majority rule to workout1. Towards introducing the principle of majority ruleIn Japan, the fundamental principle to establish workout is to obtain consent from all financial creditors subject to the proceedings. If some financial creditors do not give consent, the workout is not established. It becomes a big problem if although majority of the creditors have given consent, creditors who only hold a small amount of credit do not give consent.To allow a speedy restructuring, responding to such problem is an urgent task, and recently, various models for introducing the principle of majority to workout were considered by the study group consisting of professors and practitioners specializing in restructuring.Below, upon review of workout models of other countries, matters which were considered by the above study group will be introduced.2. Workout models of various other countries(1) Models in which workout by the principle of majority rule is establisheda. AustraliaIn Australia, there are voluntary administration and deed of company arrangement pursuant to the Corporations Act 2001. Voluntary administration starts by the company appointing a voluntary administrator (appointed from insolvency professionals) and when a majority of the creditors agrees to the execution of the deed of company arrangement (it needs consent from a majority of the creditors executing their voting rights and the credit amount shall be a majority of the total credit amount exercising its voting rights) at the creditors meeting, the deed of company arrangement becomes effective. And, the court is entitled to order variation or termination of the deed of company arrangement when there are certain grounds. The court’s involvement is ex-post and limited.b. South KoreaIn South Korea, there are administrative proceedings based on Corporate Restructuring Promotion Act. Within the administrative proceedings, the credit financial institution association consisting of credit financial institutions of debtor plays a certain role. Such association decides the commencement of the administrative proceedings and the management normalization plan is designed, and such resolution is passed by approval of credit financial institutions holding more than three-fourths of credit facility amount of the total credit facility amount. Further, the coordination committee of the credit financial institutions conducts efficient organization of entities indicating falsities and coordinates opinions with credit financial institutions. If there are any complaints against the results of the coordination, the credit financial institutions may assert a modification decision against the court. Similar to Australia, the court’s involvement is ex-post and limited.(2) Models where workout is established by the principle of majority rule and confirmation of the courta. EnglandIn England, there is a scheme of arrangement based on the Companies Act 2006. In the scheme of arrangement, first of all, a company petitions to the court requesting issuance of an order to hold a creditors’ meeting or shareholders’ meeting for approval of the scheme of arrangement, and the court determines whether such meetings should be held or not. Thereafter, if the holding is decided, the scheme of arrangement is presented at the creditors’ meeting or shareholders’ meeting, and if more than one-half of the headcount and more than three-fourths in value agree, such scheme is approved. Subsequently, with the court’s confirmation, the scheme of arrangement becomes effective.b. FranceIn France, under the 2010 Commercial Code, accelerated financial restructuring proceedings were introduced. Under such proceedings, in case the preceding reconciliation procedure ends unsuccessfully due to opposition by a portion of the financial creditors, the debtor may petition such proceedings to the court. Thereafter, under such proceedings, while continuing to repay the commercial creditors, with respect to the financial creditors and bond holders, by obtaining over two-thirds through majority vote the rights of the financial creditors can be changed, and such plan becomes effective upon receiving an order of confirmation from the court.3. Introduction of the principle of majority rule in Japan(1) Introduction of two modelsThe study group considered various models of introducing the principle of majority rule to workout. Two main models will be introduced here. The first model is the model of majority vote plus court’s confirmation. It means in workout, after obtaining majority vote at the creditors meeting, upon court’s confirmation, the rights of the financial creditors will be changed.With respect to this model, there are problems raised on whether there are adequate grounds to restrain hostile financial creditors, whether forcing modification of rights to the hostile financial creditors is against Article 29 of the Constitution which secures property rights, and whether changing the rights only for financial creditors is against Article 14 of the Constitution guaranteeing equality under the law. The second model is the model which uses the simplified civil rehabilitation provided in the Civil Rehabilitation Act. In simplified rehabilitation, when rehabilitation creditors submit a proposed rehabilitation plan by attaching the written consent of three-fifth or more of the credit amount, after a court order of simplified rehabilitation is made, the proceeding for investigation and determination of rehabilitation claims is omitted and goes to the adoption of the proposed rehabilitation plan. If the Business Revitalization ADR was conducted prior, disclosure of information is already sufficient and the plan is already formatted. Thus, by using these, the proceedings will progress quickly and in about one month, it may progress to adoption of the proposal and order of confirmation.However, when civil rehabilitation starts, how to protect the commercial creditors, which had business transactions with the debtor and have claims against the debtor, emerges as a difficult problem. Although commercial creditors are protected under the Civil Rehabilitation Act, Article 85(5) if their claims are minor, it is difficult to protect all of the commercial creditors, so the scope of protecting the commercial creditors is limited.(2) Considerations concerning indications of Constitutional violationsWith respect to the second model above, even if operational resolution using the current civil rehabilitation is tried, there is a limit to protecting the commercial paratively, the Constitutional violation raised under the first model above should be handled as described below.If many of the financial creditors agree to the proposed workout plan, even if a small portion of the financial creditors do not agree to it, the credit amount after the modification of rights based on the proposed plan should be considered as maximizing the value of the said financial claims.In order to introduce the majority principle to workout, (i) the debtor must formulate the proposed restructuring plan pursuant to the strict rule such as the one required in Business Revitalization ADR and on the basis of the debtor’s actual balance sheet based on the property appraisal pursuant to such strict rule, (ii) the proposed plan must be investigated by a specialist in a fair and neutral position, and (iii) sufficient information must be disclosed to the creditors. If many creditors agree with the proposed plan which satisfies such conditions, the proposed plan should be regarded as a tool for maximizing the repayment to the financial creditors from a fair and neutral perspective.Certainly, the proposed plan under the workout is based on a presumption of protecting commercial creditors and a big difference in repayment rate may arise between the financial creditors who are subject to modification of rights and the commercial creditors who receive full repayment. However, if the commercial creditors are not protected under the legal restructuring, the business value of the debtor will be damaged and the repayment rate to the financial creditors will decrease. In such situations, the only measure to maximize the repayment rate to the financial creditors is by doing without the legal restructuring, while protecting the commercial creditors and limiting the modification of rights to the financial creditors. In such cases, even if a person in a fair and neutral position makes an assessment, the credit value of such financial creditors shall be reasonably considered as only having the substantive value after the modification of rights. Furthermore, since the court confirmation to the proposed plan which is agreed to by many financial creditors is required, there are legal grounds to determine that the proposed plan is maximizing the repayment rate to the financial creditors. In such conditions, even if the financial creditors opposing the proposed plan are bound by it, this would not be considered as an infringement of property right nor a violation of equality.Besides, when the majority principle is introduced to the workout, two-thirds (2/3) of the financial creditors must agree with the proposed plan due to the significance of the legal effect that the financial creditors in opposition remain bound by the plan.V. SummaryIn Japan, since the number of cases where foreign creditors are involved in the legal restructuring proceedings is presumed to increase continuously, it is necessary for the proceedings to evolve in order to keep up with growing international demands. In particular, information disclosure to creditors needs to be appropriately expansive in order to ensure greater transparency. At the same time, with respect to the workout which is expected to be actively used in the years to come, a serious discussion on introduction of the principle of majority rule shall continue by referring to the foreign systems in order to realize more prompt and flexible restructuring.END ................
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