Former Acting Chief Judge of Tokyo High court signals success in insolvency law reformation
Japanese insolvency laws are finally functioning effectively after a century of failure, according to former Acting Chief Judge of Tokyo High Court Takashi Sonoo.
Speaking at an Asian Law Centre seminar this week, Judge Sonoo said the successful implementation of bankruptcy laws in recent years had come after a long period of trial and error.
"It took us such a long time to find our way," he said.
In the late 19th Century, Japan introduced insolvency laws from Europe,initially basing them on those from France, and later, in the 1920s, from Germany.
Judge Sonoo said these laws did not work effectively because of cultural differences between European countries and Japan.
"In Japan, people are tolerant of those who cannot pay their debts. People are sympathetic to those bankrupted," he said.
A comprehensive reformation of corporate insolvency laws began taking place in the 1990s, and concluded with the introduction of the Bankruptcy Act in 2004.
It signified a change from punishment to relief of debt, and the process to file for insolvency was greatly simplified and expedited.
"It has been functioning well since its first day of enforcement," Judge Sonoo said.
Judge Sonoo said recent statistics showed a huge increase in insolvent corporations filing insolvency procedures in the past decade, with up to 97 per cent now going through the correct procedures.
However, there was still work to be done, Judge Sonoo said.
"The remaining issue is to take off barriers for businesses in danger of insolvency," he said.
"We are making a greater effort, and are making some way on this. It is important for us to make proper laws with the condition of our country in mind."
By Andy Walsh