Background

Due to the economic contraction and impact of COVID-19 outbreak, many business operators are encountering financial distress. Some companies may decide to reorganize their business by way of rehabilitation to avoid being adjudged bankrupt. In this regard, it is worthwhile for the creditors of those companies to be aware of the impact of the rehabilitation proceedings that may affect their status as creditors.

Background
New approach
Creditor involvement
Comment

It is common practice in many jurisdictions – including Japan – to elect a sponsor to finance a failing business in order to revitalise it. In many insolvency cases, such election is necessary for a successful restructuring.