(Tentative Translation by Junichi Matsushita/Stacey Steele) Law … · 2005. 1. 12. · (Tentative Translation by Junichi Matsushita/Stacey Steele) Page 3 of28 (4) Where both public

(Tentative Translation by Junichi Matsushita/Stacey Steele)


Law relating to recognition and assistance for foreign insolvency proceedings(Law No 129 of 2000) (Japan)

Chapter 1 General provisions (articles 1-16)

Article 1 [Purpose]

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The purpose of this Law is to appropriately realise within Japan the efficacy of foreign insolvency proceedingsand thus provide for the international coordination of the liquidation of assets or the economic rehabilitation ofdebtors involved in international business activities, by stipulating a procedure for recognition and assistance inrelation to foreign insolvency proceedings which have been commenced in respect of such debtors.

Article 2 [Definitions etc]

In this Law, the following terms have the following meanings:

(i) "foreign insolvency proceeding" means a proceeding petitioned for in a foreign country thatcorresponds to a bankruptcy proceeding, a civil rehabilitation proceeding, a corporatereorganisation proceeding, a corporate arrangement proceeding or a special liquidationproceeding.

(ii) "foreign main proceeding" means a foreign insolvency proceeding petitioned for in a countrywhere the debtor has its principal place of business if the debtor is engaged in business; a foreigninsolvency proceeding petitioned for in a country where the debtor has his or her residence if thedebtor is an individual who is not engaged in business or who does not have a place of business;a foreign insolvency proceeding petitioned for in a country where the debtor has its principalestablishment if the debtor is a juridical person or an association or foundation.

(iii) "foreign non-main proceeding" means a foreign insolvency proceeding that is not a foreign mainproceeding.

(iv) "domestic insolvency proceeding" means a bankruptcy proceeding, a civil rehabilitationproceeding, a corporate reorganisation proceeding, a corporate arrangement proceeding or aspecial liquidation proceeding petitioned for in Japan.

(v) "recognition of a foreign insolvency proceeding" means, in respect of a foreign insolvencyproceeding, recognition as a basis for granting assistance measures which may be given for sucha proceeding in Japan pursuant to Chapter 3.

(vi) "recognition and assistance proceeding" means a proceeding where a court gives a decision1

with respect to a petition for a foreign insolvency proceeding and grants measures in order toassist a foreign insolvency proceeding regarding the business and assets in Japan of a debtorbased on the provisions stipulated in the following chapters.

(vii) "foreign trustee" means a person, other than the debtor, with the right to manage and dispose ofthe assets of the debtor in a foreign insolvency proceeding.

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(viii) "foreign trustee etc" means, in a foreign insolvency proceeding, the foreign trustee if a foreigntrustee has been appointed, or the debtor if a foreign trustee has not been appointed.

(ix) "recognition trustee" means a person who has been ordered to manage the business and assets inJapan of a debtor pursuant to article 32(1).

(2) A claim which may be demanded by way of judicial proceeding pursuant to the Code ofCivil Procedure(Minji sosho ho Law No 109 of 1996) is deemed to be located in Japan.

Article 3 [Status of foreign persons]

A foreign person or a foreign juridical person has the same status as a Japanese person or a Japanese juridicalperson with regards to a recognition and assistance proceeding.

Article 4 [Jurisdiction over recognition and assistance cases]

The Tokyo District Court has exclusive jurisdiction over recognition and assistance cases.

Article 5 [Transfer of recognition and assistance cases]

If the court stipulated in the preceding article finds it necessary in order to avoid serious harm or delay, on itsown motion, it may transfer a recognition and assistance case to a district court with jurisdiction over thedebtor's residence, domicile, place of business, establishment or location of assets at the same time as making aruling to recognise a foreign insolvency proceeding or after making that ruling.

Article 6 [Discretionary oral argument etc]

(1) A decision regarding a recognition and assistance proceeding may be given without oral argument.

(2) A court may make any necessary investigation regarding a recognition and assistance case on its ownmotion.

Article 7 [Objection petition]

A person who has an interest in a decision concerning a recognition and assistance proceeding may make an

immediate kokoku appeal2 against that decision, only where specifically provided for under this Law. Wherepublic notice of the decision has been given, the period for such an appeal is two weeks calculated from the daythat public notice became effective.

Article 8 [Public notice etc]

(1) A public notice pursuant to this Law shall be made by publication in the Official Government Gazette.

(2) A public notice becomes effective on the day after the day it was published.

(3) Public notice may be substituted for service where service is required pursuant to this Law, except incases provided for in the next paragraph.

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(4) Where both public notice and service are required pursuant to this Law, service may be effected byposting the documents by ordinary mail.

(5) A public notice in a case stipulated in the preceding paragraph has the effect of service to all interestedpersons.

(6) Where otherwise specifically provided for in this Law, the provisions in the preceding three paragraphsdo not apply.

Article 9 [Request for registration etc regarding a recognition and assistance proceeding for a juridicalperson]

(1) Where a measure has been taken in respect of a debtor that is a juridical person pursuant to articles 32(1)or 51(1) (including a case where it applies mutatis mutandis under paragraph (3) of that article), thecourt clerk must, without delay on his or her own motion, request every registry office in a place wherethe debtor has a place of business or establishment to register the measure.

(2) A registration of a measure stipulated in the preceding paragraph, must also include the name andaddress of the recognition trustee and the provisional administrator.

(3) The provision in paragraph (1) applies mutatis mutandis where there is a change or cancellation of ameasure stipulated in that paragraph, where the measure ceases to be effective (except in a case wherethat measure ceases to be effective because the recognition and assistance proceeding ceases to beeffective pursuant to articles 61(2) or 64; similarly in paragraphs (2) and (5) of the next article), orwhere a change arises with respect to a particular stipulated in the preceding paragraph.

(4) In a case where a suspension order has been made in accordance with the provisions of the mainsentence of article 57(2), article 58(1) (including a case where it applies mutatis mutandis underparagraph (2) of the same article), item (i) of article 59(1) or article 60(1) in respect of a debtor that is ajuridical person, the court clerk must, without delay on his or her own motion, request every registryoffice where the debtor has a place of business or an establishment to register the suspension order, tothe extent that any of the following registrations exist in respect of that debtor:

(i) a registration pursuant to article 119 of the Bankruptcy Law (Law No 71 of 1922);

(ii) a registration pursuant to paragraphs (1) or (2) of article 11 of the Civil Rehabilitation Law (LawNo 225 of 1999);

(iii) a registration pursuant to article 17(1) or article 18-2(1) (including a case where either of theseprovisions apply mutatis mutandis under another law) of the Corporate Reorganisation Law (LawNo 172 of 1952);

(iv) a registration pursuant to article 382 (including a case where it applies mutatis mutandis underarticle 433 of the Commercial Code or another law) or article 387(1) (including a case where itapplies mutatis mutandis under another law) of the Commercial Code (Law No 48 of 1899)(except a registration of a measure under item (v) of article 386(1) of that Law (including a casewhere it applies mutatis mutandis under another law)).

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(5) The preceding paragraph applies mutatis mutandis in respect of a case where there has been acancellation of a suspension order stipulated in that paragraph or a case where that suspension order hasceased to be effective.

(6) In a case where a ruling to cancel recognition pursuant to item (iii) of article 56(1) in respect of a debtorthat is a juridical person has become final and biding, if in respect of that debtor there is a registration asset out in any of the items in paragraph (4) or a registration made pursuant to paragraph (1) in anotherrecognition and assistance proceeding which has ceased to be effective pursuant to article 64, the courtclerk must, without delay on his or her own motion, request cancellation of that registration.

(7) In case where there is a ruling to conclude a bankruptcy or a case where a ruling to approve acompulsory composition, a ruling to approve a rehabilitation plan, a ruling to approve a corporatereorganisation plan, an order to perform an arrangement or a ruling to conclude a special liquidation hasbecome final and binding,.3- if there is a registration made pursuant to paragraph (1) in a recognition andassistance proceeding which has ceased to be effective pursuant to article 61(2), the court clerk in thecourt which is presiding over the bankruptcy proceeding, civil rehabilitation proceeding, corporatereorganisation proceeding, corporate arrangement proceeding or special liquidation proceeding must,without delay on his or her own motion, request cancellation of that registration.

Article 10 [Request for registration etc with respect to rights that are registered]

(1) In a case where a measure has been granted pursuant to article 32(1) in respect of a debtor, the courtclerk must, without delay on his or her own motion, request registration of that measure, if the clerkknows that there has been a registration with respect to a right which forms part of the debtor's assets.

(2) The preceding paragraph applies mutatis mutandis in respect of a case where there has been acancellation of a measure stipulated in that paragraph or a case where that measure has ceased to beeffective.

(3) The preceding two paragraphs do not apply in a case where there has been a request for registration of ameasure pursuant to article 32(1) pursuant to paragraph 1 of the preceding article.

(4) In a case where a measure has been taken pursuant to paragraphs (1) or (2) of article 26 regarding aregistration with respect to a right which forms part of the debtor's assets, the court clerk must, withoutdelay on his or her own motion, request registration of that measure.

(5) The preceding paragraph applies mutatis mutandis in respect of a case where there has been a change orcancellation of a measure stipulated in that paragraph or in a case where those measures have ceased tobe effective.

(6) In a case where a ruling cancelling a recognition pursuant to item (iii) of article 56(1) has become finaland binding, the court clerk must, without delay on his or her own motion, request cancellation of thatregistration, if the clerk knows that there are any of the following registrations:

(i) a registration in respect of a right which forms part of the debtor's assets and has been registeredpursuant to article 120 of the Bankruptcy Law (including a case where it applies mutatis mutandisunder article 120-2 of that Law), article 12(1) of the Civil Rehabilitation Law, article 18(1) of theCorporate Reorganisation Law (including a case where it applies mutatis mutandis under item (iii)

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of article 18-2 of that Law or another law) or article 387(2) of the Commercial Code (including acase where it applies mutatis mutandis under article 454(2) of that Law or another law);

(ii) a registration pursuant to paragraph (1) or paragraph (4) under another recognition or assistanceproceeding which has ceased to be effective pursuant to article 64

(7) In case where there is a ruling to conclude a bankruptcy or a case where a ruling to approve acompulsory composition, a ruling to approve a rehabilitation plan, a ruling to approve a corporatereorganisation plan, an order to perform an arrangement or a ruling to conclude a special liquidation hasbecome final and binding, the court clerk in the court which is presiding over the bankruptcyproceeding, civil rehabilitation proceeding, corporate reorganisation proceeding, corporate arrangementproceeding or the special liquidation proceeding must, without delay on his or her own motion, requestcancellation of a registration, if the clerk knows that there is a registration pursuant to paragraph (1) orparagraph (4) under a recognition and assistance proceeding which has ceased to be effective pursuantto article 61(2).

Article 11 [Tax exemption]

No registration tax is to be levied with respect to registration pursuant to the preceding two articles.

Article 12 [Mutatis mutandis application to recording]

The preceding two articles apply mutatis mutandis to rights which are to be recorded.

Article 13 [Perusal etc of documents regarding to a case]

(1) Interested parties may demand perusal of documents and other things that have been submitted to thecourt or prepared by the court based on the provisions of this Law or provisions of the Code ofCivilProcedure which apply mutatis mutandis in accordance with article 15 (hereafter in this article andparagraph (1) of the next article "documents etc") from the court clerk.

(2) Interested parties may demand a copy of documents, delivery of an authenticated copy, a completecertified copy or an excerpt of a certified copy of documents etc, or delivery of certificates of mattersregarding the case from the court clerk.

(3) The preceding paragraphs do not apply to cassette tapes or video tapes which come within thedocuments etc (including things that record certain matters by analogous means). In such a case, if thereis a demand by an interested person with respect to these things, the court clerk must allow for theirduplication.

(4) Notwithstanding the preceding three paragraphs, an interested party that is not a foreign trustee etc, maynot make a demand pursuant to the preceding three paragraphs until there is a suspension order pursuantto article 25(2), a measure pursuant to article 26(2), a suspension order pursuant to article 27(2), ameasure pursuant to article 51(1), a suspension order pursuant to article 58(1) or article 63(1) or adecision concerning a petition for recognition of a foreign insolvency proceeding.

Article 14 [Limitations on perusal etc of a part that forms an obstacle]

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(1) In a case where there is prima facie evidence that there are grounds to believe that perusal or copying,delivery of an authenticated copy, a complete certified copy or an excerpt of a certified copy orduplication of a particular part of the following documents etc by interested persons (hereafter in thisarticle "perusal etc") will give rise to a serious obstacle to the fulfilment of the purpose of therecognition and assistance proceeding (hereafter in this article the part is referred to as "part that formsan obstacle"), the court may limit the persons who may demand perusal etc of the part that forms anobstacle, to the person who filed the petition, the foreign trustee etc, the recognition trustee and theprovisional administrator on the petition of the debtor, foreign trustee, recognition trustee or provisionaladministrator who submitted those documents etc.

(i) Documents etc that are submitted to the court for the purpose of obtaining the approval pursuant toclause 31(1), clause 35(1) (including a case where it applies mutatis mutandis under clause 55(1»or the proviso in article 53(1).

(ii) Documents etc for the reports pursuant to article 17(3) or article 46 (including a case where itapplies mutatis mutandis under article 55(1».

(2) If a petition under the preceding paragraph is made, until a ruling with respect to that petition becomesfinal and binding, interested persons (except the person who filed the petition under that paragraph, theforeign trustee etc, the recognition trustee and the provisional administrator; similarly in the nextparagraph) may not make a demand for perusal etc of a part that forms an obstacle.

(3) Interested persons who want to make a demand for perusal etc of a part that forms an obstacle, maymake a petition to the court for the cancellation of a ruling stipulated in the preceding paragraph for thereason that it lacks the requirements stipulated in paragraph (1) or that they have ceased to exist.

(4) An immediate kokoku appeal may be made against a ruling which dismisses a petition under paragraph(1) and a decision with respect to a petition under the preceding paragraph.

(5) A ruling cancelling a ruling pursuant to paragraph (1) does not become effective until it becomes finaland binding.

Article 15 [Mutatis mutandis application of the Code of Civil Procedure]

The provisions of the Code ofCivil Procedure will apply mutatis mutandis with regards to recognition andassistance proceedings except where otherwise provided.

Article 16 [Rules of the Supreme Court]

In addition to the matters provided for in this Law, other necessary matters for recognition and assistanceproceedings will be stipulated in the Rules of the Supreme Court.

Chapter 2 Recognition of a foreign insolvency proceeding (articles 17-24)

Article 17 [Petition for recognition of a foreign insolvency proceeding]

(1) In a case where the debtor's residence, domicile, place of business or establishment is in a country wherea foreign insolvency proceeding is being brought, the foreign trustee etc may make a petition for

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recognition to the court in respect of that foreign insolvency proceeding.

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(2) A petition under the preceding paragraph may be made even before there is a ruling with respect to thatforeign insolvency proceeding which corresponds to a bankruptcy adjudication, a ruling to commence arehabilitation proceeding, a ruling to commence a corporate reorganisation proceeding, order tocommence an arrangement or an order to commence a special liquidation (in article 22(1), "decision forcommencement of a proceeding").

(3) In a case where a petition under paragraph (1) has been made, as decided by the court, the foreigntrustee etc must report to the court on the condition of the progress of the foreign insolvency proceedingto which that petition relates as well as any other matters ordered by the court.

(4) If the court finds it necessary to promote the smooth progress of the recognition and assistanceproceeding, it may order the appointment of a lawyer as a representative in respect of the recognitionand assistance proceeding to the foreign trustee etc who made the petition under paragraph (1).

Article 18 [Duty to petition for bankruptcy etc and petition for recognition of a foreign insolvencyproceeding]

Where a manager or analogous person of a juridical person must make a petition for commencement of thebankruptcy or special liquidation of that juridical person in accordance with another law, he or she may make a

petition for recognition of a foreign insolvency proceeding instead1.

Article 19 [Primafacie evidence]

If a petition for recognition of a foreign proceeding is made, there must be prima facie evidence that the debtor'sresidence, domicile, place of business or establishment is in the country where the foreign insolvencyproceeding is being brought.

Article 20 [Prepayment of costs into court]

(1) If a petition for recognition of a foreign insolvency proceeding is made, the foreign trustee etc must payinto court an advance amount as decided by the court for the costs of the recognition and assistanceproceeding.

(2) An immediate kokoku appeal may be made against a ruling regarding the advance amount for the coststo be prepaid into court.

Article 21 [Conditions for recognition of a foreign insolvency proceeding]

In a case corresponding to any of the following items, the court must dismiss a petition for recognition of aforeign insolvency proceeding:

(i) if the advance amount of the costs for the recognition and assistance proceeding has not beenpaid;

(ii) if it is clear that the foreign insolvency proceeding will not have an effect on the assets of thedebtor which are located within Japan;

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(iii) if the assistance measures pursuant to the next chapter in respect of that foreign insolvencyproceeding are against public order and good public morals in Japan;

(iv) if it is clear that it is not necessary to grant recognition measures pursuant to the next chapter inrespect of that foreign insolvency proceeding;

(v) if the foreign trustee etc violates article 17(3) in respect of that foreign insolvency proceeding.Provided that this does not apply if that violation is of a minor degree;

(vi) if it is clear that the petition was made based on an unfair purpose, or the petition was not madefaithfully.

Article 22 [Ruling to recognise a foreign insolvency proceeding]

(1) In a case where a petition for recognition of a foreign insolvency proceeding which meets therequirements stipulated in article 17(1) is made, if there has been a decision for commencement of aproceeding in relation to that foreign insolvency proceeding, the court will make a ruling to recognisethat foreign insolvency proceeding except in a case where the petition is dismissed pursuant to thepreceding article, article 57(1) or article 62(1).

(2) A ruling under the preceding paragraph takes effect from the time that ruling was made.

Article 23 [Public notice etc of recognition of a foreign insolvency proceeding]

(1) If a ruling to recognise a foreign insolvency proceeding is made, the court must immediately give publicnotice of the formal disposition of that ruling.5.

(2) Documents containing the formal disposition of the ruling to recognise the foreign insolvencyproceeding must be served on the foreign trustee etc. The same also applies in respect of a provisionaladministrator in a case where a measure has been granted pursuant to article 51(1) (including a casewhere it applies mutatis mutandis under article 51(3)).

(3) The fact that a ruling to recognise the foreign insolvency proceeding has been made must be notified tothe persons listed in each of the following items. However, this does not apply in respect of persons tothe extent that have already been notified pursuant to the main sentence of article 25(9) (including a casewhere it applies mutatis mutandis under article 26(6), article 27(8), article 52(5) or article 58(7)).

(i) Government agencies and offices with jurisdiction over taxation and other public imposts that areto be specified in the Rules of the Supreme Court.

(ii) If there is a labour union which is made up of a majority of a debtor's staff or other employees inJapan, that labour union; and if there is no labour union made up of a majority of a debtor's staff orother employees in Japan, a person representing a majority of the debtor's staff or other employeesin Japan.

Article 24 [Immediate kokoku appeals etc]

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(1) An immediate kokoku appeal may be made against a decision with respect to a petition for recognitionof a foreign insolvency proceeding.

(2) If a ruling cancelling a ruling to recognise a foreign insolvency proceeding becomes final and binding,the court that made the ruling to recognise a foreign insolvency proceeding must immediately givepublic notice of its formal disposition, and documents containing its formal disposition must be servedon the foreign trustee etc.

(3) If a ruling cancelling a ruling to recognise a foreign insolvency proceeding becomes final and binding,suspension orders pursuant to paragraphs (1) or (2) of the next article, measures pursuant to paragraphs(1) or (2) of article 26, suspension orders pursuant to paragraphs (1) or (2) of article 27, prohibitionorders pursuant to article 28(1) and measures pursuant to article 32(1), cease to be effective.

Chapter 3 Assistance measures for foreign insolvency proceedings (articles 25-55)

Article 25 [Suspension order for other proceedings etc]

(1) If it finds it necessary in order to fulfil the purpose of the recognition and assistance proceeding, thecourt may, on the petition of an interested person or its own motion, order the suspension of thefollowing proceedings either at the same time as making a ruling to recognise a foreign insolvencyproceeding or after making that ruling.

(i) A proceeding for compulsory execution, provisional attachment or provisional disposition(hereafter "compulsory execution etc") against the debtor's assets (but limited to those assetswhich are in Japan; similarly in the following paragraphs).

(ii) A litigation proceeding regarding the debtor's assets.

(iii) A proceeding pending in a government agency on a case regarding the debtor's assets

(2) In a case where a petition for recognition of a foreign insolvency proceeding has been made, even beforemaking a ruling in respect of that petition, the court may grant a suspension order pursuant to thepreceding paragraph. The same also applies if an immediate kokoku appeal is made under paragraph (1)of the preceding article against a ruling dismissing a petition for recognition of a foreign insolvencyproceeding.

(3) If a ruling dismissing a petition for recognition of a foreign insolvency proceeding or a ruling dismissingan immediate kokoku appeal made pursuant to the preceding paragraph is made, a suspension orderpursuant to the preceding paragraph ceases to be effective.

(4) The court may change or cancel a suspension order pursuant to paragraphs (1) or (2).

(5) If it finds that it is specifically necessary in order to fulfil the purpose of the recognition and assistanceproceeding, the court may order the cancellation of a proceeding for compulsory execution etc whichhas been suspended pursuant to paragraphs (1) or (2), with or without furnishing security, on the petitionof the debtor (but only in a case where there is no foreign trustee) or the petition of the recognitiontrustee, or on its own motion. However, with respect to cancellation of a compulsory execution etcwhich has been suspended pursuant to those paragraphs, this only applies after a ruling to recognise the

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foreign insolvency proceeding has been made.

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(6) An immediate kokoku appeal may be made against a suspension order pursuant to paragraphs (1) or (2),a ruling pursuant to paragraph (4) or an order for cancellation pursuant to the preceding paragraph.

(7) An immediate kokoku appeal does not have the effect of suspending the effectiveness of the ruling..Q

(8) In a case where there is a decision stipulated in paragraph (6) and a decision with respect to animmediate kokoku appeal under that same paragraph, that written ruling must be served on the partiesinvolved. In a case such as this, article 8(3) does not apply.

(9) The fact that an order pursuant to paragraph (2) has been made must be notified to the persons listed ineach of the items of article 23(3). However, this does not apply with respect to persons who havealready been notified pursuant to the provision stipulated in the proviso to paragraph (3) of the samearticle.

Article 26 [Prohibition on disposition, prohibition on payments and other measures]

(1) If it finds that it is necessary in order to fulfil the purpose of the recognition and assistance proceeding,the court may, on the petition of an interested person or on its own motion, grant measures ordering aprohibition on disposition regarding the debtor's business and assets in Japan, measures ordering aprohibition on payments or other measures, either at the same time as making a ruling to recognise aforeign insolvency proceeding or after making that ruling.

(2) In a case where a petition for recognition of a foreign insolvency proceeding has been made, even beforemaking a ruling in respect of that petition, the court may grant a measure pursuant to the precedingparagraph. The same also applies if an immediate kokoku appeal is made under article 24(1) against aruling dismissing a petition for recognition of a foreign insolvency proceeding.

(3) A measure pursuant to the preceding paragraph ceases to be effective if a ruling dismissing a petition forrecognition of a foreign insolvency proceeding or a ruling dismissing an immediate kokoku appeal underthat paragraph is made.

(4) The court may change or cancel a measure pursuant to paragraphs (1) or (2).

(5) In a case where the court grants a measure pursuant to paragraphs (1) or (2) ordering a prohibition onpayments by a debtor to a creditor or other act which extinguishes an obligation, a creditor may notclaim that a payment or other act which extinguishes an obligation that violates that measure is effectivein relation to the recognition and assistance proceeding. However, this is only where the creditor knewof that measure at the time of the act.

(6) The provisions from paragraph (6) to paragraph (8) of the preceding article apply mutatis mutandis inrespect of a measure pursuant to paragraphs (1) or (2) and a ruling pursuant to paragraph (4), and theprovisions of paragraph (8) of the same article apply mutatis mutandis in respect of a case where aruling has been made with respect to an immediate kokoku appeal under paragraph (6) of that paragraphas it applies mutatis mutandis under this paragraph, and the provisions of paragraph (9) of the samearticle apply mutatis mutandis in respect of a case where a measure has been granted pursuant toparagraph (2).

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Article 27 [Suspension order for an official auction aimed at enforcing a security interest]

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(1) If it finds that it is in the general interests of creditors and there is no likelihood of its causingunreasonable loss to the person who petitioned for the official auction or the person who petitioned forthe enforcement proceeding for an enterprise hypothecation claim, the court may order the suspension ofan official auction proceeding aimed at enforcing a security interest already in existence against an assetof the debtor or an enforcement proceeding for an enterprise hypothecation claim, for an appropriateperiod decided by the court, on a petition by an interested person or on its own motion either at the sametime as making a ruling to recognise a foreign insolvency proceeding or after making that ruling.

(2) In a case where there has been a petition for recognition of a foreign insolvency proceeding, even beforemaking a ruling in respect of that petition, the court may grant a suspension order pursuant to thepreceding paragraph. The same also applies if an immediate kokoku appeal is made under article 24(1)against a ruling dismissing a petition for recognition of a foreign insolvency proceeding.

(3) A suspension order pursuant to the preceding paragraph ceases to be effective if a ruling dismissing apetition for recognition of a foreign insolvency proceeding or a ruling dismissing an immediate kokokuappeal under the same paragraph is made.

(4) In a case where a suspension order has been issued pursuant to paragraphs (1) or (2), the court must hearthe opinion of the person who petitioned for the official auction or the enforcement proceeding for theenterprise hypothecation claim.

(5) The court may change or cancel a suspension order pursuant to paragraphs (1) or (2).

(6) Only the person who petitioned for the official auction or the enforcement proceeding for the enterprisehypothecation claim may make an immediate kokoku appeal against a suspension order pursuant toparagraphs (1) or (2) and a ruling to make a change pursuant to the preceding paragraph.

(7) An immediate kokoku appeal does not have the effect of suspending the effectiveness of the ruling.

(8) The provisions of article 25(8) apply mutatis mutandis to a suspension order pursuant to paragraphs (1)and (2), and in respect of a case where a ruling pursuant to paragraph (5) and a decision with respect toan immediate kokoku appeal have been made, and the provisions of paragraph (9) of the same articleapply mutatis mutandis in a case where a suspension order pursuant to paragraph (2).

Article 28 [Prohibition order for compulsory execution etc]

(1) If it finds it necessary in order to fulfil the purpose of the recognition and assistance proceeding, thecourt may, on a petition by an interested person or on its own motion either at the same time as making aruling to recognise a foreign insolvency proceeding or after making that ruling, order the prohibition ofcompulsory execution etc against a debtor's assets by any creditors. In this case, the court may, if it findsit appropriate, exclude from the subject of the prohibition order compulsory execution etc based onclaims which fall within a certain scope or compulsory execution etc against a debtor's assets which fallwithin a certain scope.

(2) In a case where a prohibition order pursuant to the preceding paragraph (hereafter "prohibition order for

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compulsory execution etc") has been issued, a proceeding for compulsory execution etc against adebtor's assets (but only those things which are prohibited under that order) which had already beencommenced is suspended.

(3) The court may change or cancel a prohibition order for compulsory execution etc.

(4) If it finds that it is specifically necessary in order to fulfil the purpose of the recognition and assistanceproceeding, the court may order the cancellation of a proceeding for compulsory execution etc whichhas been suspended pursuant to paragraph (2), with or without furnishing security, on the petition of thedebtor (but only in a case where there is no foreign trustee) or the petition of the recognition trustee, oron its own motion.

(5) An immediate kokoku appeal may be made against a prohibition order for compulsory execution etc, aruling pursuant to paragraph (3) and an order for cancellation pursuant to the preceding paragraph.

(6) An immediate kokoku appeal under the preceding paragraph does not have the effect of suspending theeffectiveness of the ruling.

(7) If a prohibition order for compulsory execution etc has been issued, in respect of claims against thedebtor (but only those claims based on compulsory executions etc which have been prohibited by thatorder),1 the period for prescription or limitation of time is not complete until two months have passedafter the day that order ceases to be effective.

Article 29 [Public notice and service etc regarding a prohibition order for compulsory execution etc]

(1) In a case where there has been a ruling making, changing or cancelling a prohibition order forcompulsory execution etc, public notice of those reasons must be given and that written ruling must beserved on the foreign trustee etc, recognition trustee and the person who made the petition. In a casesuch as this, in respect of service of the written ruling, paragraphs (4) and (5) of article 8 do not apply.

(2) If a prohibition order for compulsory execution etc was issued at the same time as a ruling to recognise aforeign insolvency proceeding, the court must also list the formal disposition for the prohibition orderfor compulsory execution in the public notice pursuant to article 23(1). In a case such as this, it is notnecessary to give public notice pursuant to the preceding paragraph.

(3) In a case under paragraph (1), a foreign trustee etc who receives service of a written ruling under thatsame paragraph, must take the necessary steps in order to inform creditors of the contents of that writtenruling.

(4) A ruling making, changing or cancelling a prohibition order for compulsory execution etc takes effectfrom the time of service of the written ruling on the foreign trustee etc (in a case where a recognitiontrustee has been appointed, on the recognition trustee).

(5) In a case where there has been an order for cancellation pursuant to paragraph (4) of the precedingarticle and a decision with respect to an immediate kokoku appeal under paragraph (5) of the samearticle (except a ruling changing or cancelling a prohibition order for compulsory execution etc), thatwritten ruling must be served on the parties involved.

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Article 30 [Termination of a prohibition order for compulsory execution etc]

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(1) In a case where a prohibition order for compulsory execution etc was issued, if it finds that there is alikelihood that unreasonable loss will be suffered by the creditor who petitioned for the compulsoryexecution etc, the court may, on the petition of that creditor, make a ruling terminating the prohibitionorder for compulsory execution etc against that creditor. In such a case, that creditor may effect acompulsory execution etc against the debtor's assets, and any proceeding for compulsory execution etcwhich was commenced by that creditor before the prohibition order for compulsory execution etc wasissued, will resume.

(2) With respect to the application of article 28(7) against a person who has obtained a ruling fortermination pursuant to the preceding paragraph, the phrase "the day that order ceases to be effective" inthat paragraph will be read "the day the ruling for termination pursuant to article 30(1) was made".

(3) An immediate kokoku appeal may be made against a decision with respect to paragraph (1).

(4) An immediate kokoku appeal under the preceding paragraph does not have the effect of suspending theeffectiveness of the ruling .

(5) In a case where there has been a decision with respect to a petition under paragraph (1) and a decisionwith respect to an immediate kokoku appeal under paragraph (3), that written ruling must be served onthe parties involved. In such a case, article 8(3) does not apply.

Article 31 [Approval for the disposition etc of assets of the debtor]

(1) If it finds it necessary, in a case which corresponds to any of the following items, the court may requirethe debtor to obtain the court's approval for the disposition or repatriation overseas of assets located inJapan by the debtor as well as any other acts specified by the court. However, this does not apply in acase where there is a recognition trustee or a provisional administrator.

(i) If a suspension order pursuant to paragraphs (1) or (2) of article 25, a measure pursuant toparagraphs (1) or (2) of article 26, a suspension order pursuant to paragraphs (1) or (2) of article27, a prohibition order for compulsory execution etc, or a suspension order pursuant to article 57(2), article 58(1) (including a case where it applies mutatis mutandis under paragraph (2) of thesame article), item (i) of paragraph (1) of article 59, article 60(1) or article 63(1), has been issued.

(ii) If there is a recognition and assistance proceeding under a foreign non-main proceeding which hasbeen suspended pursuant to article 62(2).

(2) The court may grant approval under the preceding paragraph only in a case where it finds that there isno likelihood of the interests of creditors in Japan being unreasonably prejudiced.

(3) A juristic act for which approval under paragraph (1) has not been obtained is void. However, this maynot be asserted against a bona fide third party.

Article 32 [Management order]

(1) If it finds it necessary in order to fulfil the purpose of the recognition and assistance proceeding, the

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court may, on the petition of an interested person or its own motion, either at the same time as making aruling to recognise a foreign insolvency proceeding or after making that ruling, grant a measure orderingmanagement by a recognition trustee of the debtor's business and assets in Japan.

(2) In a case where it grants a measure under the preceding paragraph (hereafter "management order"), thecourt must appoint one or more recognition trustees in the management order.

(3) A juridical person may be a recognition trustee.

(4) The court may change or cancel a management order.

(5) An immediate kokoku appeal may be made against a management order and a ruling pursuant to thepreceding paragraph.


Article 33 [Public notice and service regarding a management order]

(1) If it issues a management order, the court must give public notice of the following matters, except in acase provided for in the next paragraph.

(i) That the management order was issued and the name and address of the recognition trustee.

(ii) That possessors of assets of the debtor and persons owing an obligation to the debtor (in paragraph(6) "possessors of assets etc") may not tum over the assets or pay the debtor.

(2) If it issues a management order at the same time as making a ruling to recognise a foreign insolvencyproceeding, the court must also list the matters listed in the preceding paragraph in the public noticepursuant to article 23(1).

(3) In a case where it makes a ruling changing or cancelling a management order, the court must give publicnotice of its formal disposition.

(4) In a case where there has been a management order, a ruling under the preceding paragraph or adecision with respect to an immediate kokoku appeal under paragraph (5) of the preceding article, thatwritten ruling must be served on the parties involved.

(5) A ruling making, changing or cancelling a management order, takes effect from the time of service ofthe written ruling on the recognition trustee etc.

(6) In a case where a management order has been issued, documents containing matters listed in paragraph(1), and in a case where there is a ruling under paragraph (3) or in a case where a ruling cancelling aruling to recognise a foreign insolvency proceeding becomes final and binding after a management order

has been issued, documents containing the contents of that ruling,.8. must be served on known possessorsof assets etc.

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(7) Service pursuant to the preceding paragraph may be effected by posting the documents by ordinary mail.

(8) In a case where documents have been served by ordinary mail pursuant to the preceding paragraph,service is deemed to have occurred at the time that those postal items would have ordinarily arrived.

(9) Paragraphs (4) and (5) of article 8 do not apply in a case where there must be public notice and serviceregarding a management order.

Article 34 [Authority of recognition trustee]

In a case where a management order has been issued, the right to operate the business and manage and disposeof assets of the debtor in Japan is vested exclusively in the recognition trustee appointed by the court.

Article 35 [Approval for the disposition of assets etc by the recognition trustee]

(1) The recognition trustee must obtain the court's approval for the disposition or repatriation overseas ofassets of the debtor located in Japan as well as any other acts specified by the court.

(2) The court may grant approval under the preceding paragraph only in a case where it finds that there isno likelihood of the interests of creditors in Japan being unreasonably prejudiced.

(3) A juristic act for which approval under paragraph (1) has not been obtained is void. However, this maynot be asserted against a bona fide third party.

Article 36 [Treatment of lawsuits relating to the assets of a debtor where a management order has beenissued]

(1) In a case where a management order has been issued, the recognition trustee becomes the plaintiff ordefendant in respect of a lawsuit regarding the debtor's assets in Japan.

(2) In a case where a management order has been issued, a lawsuit proceeding regarding the debtor's assetsin Japan is suspended.

(3) A lawsuit proceeding which has been suspended pursuant to the preceding paragraph may be succeededto by the recognition trustee. In such a case, the other party to the lawsuit may also request thesuccession.

(4) If a management order ceases to be effective before there is a succession pursuant to the precedingparagraph in respect of a lawsuit proceeding which has been suspended pursuant to paragraph (2), thelawsuit proceeding is automatically succeeded to by the debtor.

(5) If a management order ceases to be effective after a succession pursuant to paragraph (3) in respect of alawsuit proceeding which has been suspended pursuant to paragraph (2), the lawsuit proceeding issuspended.

(6) In a case under the preceding paragraph, the debtor must succeed to the lawsuit proceeding. In such acase, the other party to the lawsuit may also request the succession.

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Article 37 [Treatment of cases pending in a government agency]

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Paragraphs (2) to (6) of the preceding article apply mutatis mutandis to a case concerning the debtor's assets inJapan pending in a government agency at the time the management order has been issued.

Article 38 [Supervision etc of a recognition trustee]

(1) The court will supervise a recognition trustee.

(2) If there are substantial reasons, the court may, on the petition of an interested party or on its ownmotion, remove a recognition trustee. In such a case, the recognition trustee must be heard.

Article 39 [Discharge of duties by several recognition trustees]

(1) If there are several recognition trustees, they exercise their duties jointly. However, with the approval ofthe court, they may exercise their duties independently or divide duties among themselves.

(2) If there are several recognition trustees, a manifestation of intention by a third party is sufficient if itapplies with respect to one of them.

Article 40 [Recognition trustee representative]

(1) If it is necessary, a recognition trustee may, exercising their own responsibilities, appoint one or morepersons as recognition trustee representatives in order to perform their duties.

(2) Court approval must be obtained in respect of the appointment of a recognition trustee representativeunder the preceding paragraph.

Article 41 [Investigation by a recognition trustee]

A recognition trustee may demand reports about the state of the debtor's business and assets in Japan from thedebtor or a legal representative where it is an individual and from a manager, director, secretary, auditor,liquidator or an analogous person where it is a juridical person, and may inspect the accounts, documents aswell as other objects of the debtor.

Article 42 [Management of the business and assets of a debtor]

A recognition trustee must commence management of the debtor's business and assets in Japan immediatelyupon taking office.

Article 43 [Management of postal items]

(1) The court may request government agencies as well as other persons in charge of communication affairsto deliver postal items addressed to the debtor to the recognition trustee.

(2) On the petition of the debtor or on its own motion, the court may, after hearing the opinion of therecognition trustee, cancel or change a request stipulated in the preceding paragraph.

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(3) If a management order ceases to be effective, the court must cancel a request stipulated in paragraph (1).

Article 442

(1) If they receive a postal item addressed to the debtor, a recognition trustee may open and read it.

(2) A debtor may request that the recognition trustee allow them to peruse a postal item received by therecognition trustee under the preceding paragraph or that those postal items which do not relate to thedebtor's assets in Japan be returned to them.

Article 45 [Recognition trustee's duty of care]

(1) A recognition trustee must exercise their duties with the care of a good manager.

(2) If a recognition trustee fails to use the care mentioned in the preceding paragraph, that recognitiontrustee is liable to pay compensation for losses to interested parties jointly and severally.

Article 46 [Recognition trustee's duty to report]

A recognition trustee must, as decided by the court, report to the court on the state of the management of thedebtor's business and assets in Japan as well as any other matters ordered by the court.

Article 47 [Restrictions on acts by a recognition trustee]

(1) Without obtaining the court's approval, a recognition trustee may not accept assignment of a debtor'sassets, transfer its own assets to a debtor or conduct any other transaction with the debtor for its ownbenefit or for the benefit of a third party.

(2) Acts for which approval has not been obtained under the preceding paragraph are void. However, thismay not be asserted against a bona fide third party.

Article 48 [Acts etc by a debtor after a management order]

(1) A juristic act by a debtor after a management order has been issued relating to the debtor's assets overwhich the recognition trustee has the right to manage and dispose, may not be asserted as effective inconnection with the recognition and assistance proceeding. However, if the other party did not know ofthe fact that a management order had been issued at the time of the act, this does not apply.

(2) A payment to a debtor made in Japan after a management order has been issued but without knowledgeof that fact in respect of a claim located in Japan, may be asserted as effective in connection with therecognition and assistance proceeding.

(3) A payment to a debtor made in Japan after a management order has been issued but with knowledge ofthat fact in respect of a claim under the preceding paragraph, may be asserted as effective in connectionwith the recognition and assistance proceeding only to the extent of the benefit accruing to the debtor'sassets over which the recognition trustee has the right to manage and dispose.

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(4) In respect of the application of the preceding three paragraphs, before public notice pursuant to article33(1) (in a case where the management order was issued at the same time as the ruling to recognise theforeign insolvency proceeding, public notice pursuant to article 23(1» it will be presumed that the factwas not known, and after such public notice it will be presumed that the fact was known.

Article 49 [Remuneration etc of a recognition trustee]

(1) A recognition trustee and a recognition trustee representative may receive advance payment of costs andremuneration decided by the court. However, this does not apply with respect to a recognition trustee ora recognition trustee representative who is a foreign trustee.

(2) A recognition trustee and a recognition trustee representative must obtain the approval of the court toaccept assignment or make a transfer of claims against the debtor, shares of the debtor or any otherundivided interest arising out of investments against the debtor once they have been appointed.

(3) If a recognition trustee and a recognition trustee representative do an act stipulated under the precedingparagraph without obtaining the approval of the court under that paragraph they may not receivepayment of costs and remuneration.

(4) An immediate kokoku appeal may be made against a ruling pursuant to paragraph (1).

Article 50 [Duty to report where appointment terminated]

(1) In a case where the recognition trustee's appointment is terminated, a recognition trustee or theirsuccessor must, without delay, make a report of accounts to the court.

(2) In a case where a recognition trustee's appointment is terminated, if there are urgent circumstances, therecognition trustee or their successor must take necessary measures until the succeeding recognitiontrustee or debtor becomes able to manage the assets.

Article 51 [Provisional administration order]

(1) In a case where a petition for recognition of a foreign insolvency proceeding has been made, if it finds itspecifically necessary in order to fulfil the purpose of the recognition and assistance proceeding, thecourt may, on the petition of an interested person or its own motion, grant a measure orderingmanagement by a provisional administrator in relation to the debtor's business and assets in Japan duringthe period up until a ruling is made with respect to that petition for recognition of a foreign insolvencyproceeding.

(2) In a case where it grants a measure under the preceding paragraph (hereafter "provisional administrationorder"), the court must appoint one or more provisional administrators in the provisional administrationorder.

(3) The preceding two paragraphs apply mutatis mutandis in a case where an immediate kokoku appealunder article 24(1) is made against a ruling to dismiss a petition for recognition of a foreign insolvencyproceeding.

(4) The court may change or cancel a provisional administration order.

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(5) An immediate kokoku appeal may be made against a provisional administration order and a rulingpursuant to the preceding paragraph.


Article 52 [Public notice and service etc regarding provisional administration order]

(1) If a provisional administration order was issued, the court must give public notice of that fact. The sameapplies where there has been a ruling changing or cancelling a provisional administration order.

(2) In a case where there has been a provisional administration order, a ruling pursuant to paragraph (4) ofthe preceding article and a decision with respect to an immediate kokoku appeal under paragraph (5) ofthat same article, that written ruling must be served on the parties involved.

(3) A ruling making, changing or cancelling a provisional administration order takes effect from the timethe written decision is served on the provisional administrator.

(4) In respect of a case where public notice and service relating to a provisional administration order mustbe given, paragraphs (4) and (5) of article 8 do not apply.

(5) In a case where there has been a provisional administration order, article 29(5) applies mutatis mutandis.

Article 53 [Authority of provisional administrator]

(1) In a case where a provisional administration order has been issued, the right to operate the business andmanage and dispose of assets of the debtor in Japan is vested exclusively in the provisionaladministrator. However, the provisional administrator must obtain the approval of the court for acts notfalling within the ordinary business of the debtor.

(2) A juristic act for which approval under the proviso in the preceding paragraph has not been obtained isvoid. However, this may not be asserted against a bonafide third party.

Article 54 [Provisional administrator representative]

(1) If it is necessary, a provisional administrator may, exercising their own responsibilities, appoint one ormore persons as provisional administrator representatives in order to perform their duties.

(2) Court approval must be obtained in respect of the appointment of a provisional administratorrepresentative under the preceding paragraph.

Article 55 [Mutatis mutandis application to a provisional administrator etc of provisions regarding arecognition trustee]

(1) Article 32(3), article 35, article 36(1), article 38, article 39, article 41, article 42 and articles 44 to 50apply mutatis mutandis in respect of a provisional administrator, and article 49 applies mutatis mutandis

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in respect of a provisional administrator representative.

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(2) Paragraphs (2) to (6) of article 36 apply mutatis mutandis in respect of: a lawsuit relating to the debtor'sassets in Japan pending at the same time as a provisional administration order has been issued; a caserelating to the debtor's assets in Japan which is pending in an administration agency at the same time asa provisional administration order has been issued.

Chapter 4 Cancellation of recognition of a foreign insolvency proceeding (article 56)10

Article 5611

(1) In a case that corresponds to any of the following items, the court must make a ruling cancelling therecognition of a foreign insolvency proceeding on the petition of an interested party or its own motion.

(i) If it becomes clear that the petition for recognition of a foreign insolvency proceeding lacks therequirements stipulated in article 17(1).

(ii) If it becomes clear that any of the reasons stipulated in items (ii) to (vi) of article 21 exist inrespect of the foreign insolvency proceeding.

(iii) If there is a decision which corresponds to a ruling to conclude a bankruptcy proceeding, a rulingto approve a compulsory composition, a ruling to approve a rehabilitation plan, a ruling toapprove a corporate reorganisation plan, an order to perform an arrangement or a ruling toconclude a special liquidation, and the foreign insolvency proceeding is terminated.

(iv) If the foreign insolvency proceeding is terminated for reasons not stipulated in the preceding item.

(2) In a case that corresponds to any of the following items, the court may make a ruling cancelling therecognition of a foreign insolvency proceeding on the petition of an interested party or its own motion.

(i) If a debtor violates article 31(1).

(ii) If a foreign trustee who is the recognition trustee violates article 35(1) or article 46.

(iii) If a foreign trustee who is not the recognition trustee disposes or repatriates overseas assets of thedebtor located in Japan.

(3) If a decision for cancellation is made under paragraph (2), the court must immediately give public noticeof its formal disposition and the elements of its reasons. 12

(4) An immediate kokoku appeal may be made against a ruling for cancellation under paragraphs (1) or (2).

(5) If a ruling cancelling a ruling for cancellation under paragraphs (1) or (2) has become final and binding,the court that made the ruling for cancellation under paragraphs (1) or (2) must immediately give publicnotice of that fact.

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(6) A ruling for cancellation under paragraphs (1) or (2) does not become effective until it becomes finaland binding.

(7) Article 24(3) applies mutatis mutandis in respect of a case where a ruling for cancellation underparagraphs (1) or (2) becomes final and binding.

Chapter 5 Treatment where there is another insolvency proceeding

Section 1 Treatment where there is a domestic insolvency proceeding (articles 57-61)

Article 57 [Conditions etc for recognition where there has been a commencement ruling for a domesticinsolvency proceeding]

(1) Before a ruling in respect of a petition for recognition of a foreign insolvency proceeding is made, if ithas become clear that there is a domestic insolvency proceeding in which there has been a ruling forcommencement with respect to the same debtor, except where all of the following requirements arefulfilled, the court must dismiss that petition.

(i) The foreign insolvency proceeding is a foreign main proceeding.

(ii) It finds that it is in the general interests of the creditors to take assistance measures pursuant toChapter 3 in respect of the foreign insolvency proceeding.

(iii) There is no likelihood of the interests of creditors in Japan being unreasonably prejudiced if itgrants assistance measures pursuant to Chapter 3 in respect of the foreign insolvency proceeding.

(2) In a case where it has become clear that there is a domestic insolvency proceeding stipulated in thepreceding paragraph, if a ruling to recognise a foreign insolvency proceeding is to be made, the courtunder the preceding paragraph must order the suspension of the domestic insolvency proceeding.However, this does not apply if the domestic insolvency proceeding has been suspended pursuant toparagraph (1) of the next article (including a case where it applies mutatis mutandis under paragraph (2)of the same article).

(3) The court may cancel an order for suspension pursuant to the preceding paragraph.

(4) An immediate kokoku appeal may be made against an order for suspension pursuant to paragraph (2)and ruling pursuant to the preceding paragraph.


(6) In a case where there is a decision pursuant to paragraph (4) and a decision with respect to an immediatekokoku appeal under the same paragraph, that written ruling must be served on the parties involved.

Article 58 [Suspension order for a domestic insolvency proceeding before a ruling to recognise a foreigninsolvency proceeding]



(1) If it finds it necessary, before making a ruling in respect of a petition for recognition of a foreigninsolvency proceeding, the court which is presiding over the recognition and assistance proceeding may,on the petition of an interested party or on its own motion, order the suspension of a domesticinsolvency proceeding with respect to the same debtor. However, this is only in a case where all of therequirements listed in each of the items of paragraph (1) of the preceding article are fulfilled.

(2) The preceding paragraph applies mutatis mutandis in respect of a case where an immediate kokokuappeal has been made under article 24(1) against a ruling dismissing a petition for recognition of aforeign insolvency proceeding.

(3) The court may change or cancel an order for suspension pursuant to paragraph (1) (including a casewhere it applies mutatis mutandis under the preceding paragraph; similarly hereafter in this article andarticle 61(1)).

(4) An immediate kokoku appeal may be made against an order for suspension pursuant to paragraph (1)and a ruling pursuant to the preceding paragraph.

(5) An immediate kokoku appeal under the preceding paragraph does not have the effect of suspending theeffectiveness of the ruling.

(6) In a case where there has been a decision with respect to a decision under paragraph (4) and a decisionwith respect to an immediate kokoku appeal under the same paragraph, that written ruling must beserved on the parties involved.

(7) Article 25(9) applies mutatis mutandis in a case where there has been an order for suspension pursuantto paragraph (1).

Article 59 [Coordination where a ruling to recognise a foreign insolvency proceeding and acommencement ruling for a domestic insolvency proceeding are competing]

(1) After there has been a ruling to recognise a foreign insolvency proceeding, in a case where it hasbecome clear that there has been a ruling for commencement of a domestic insolvency proceeding withrespect to the same debtor after that ruling, or that there has been a ruling for commencement of adomestic insolvency proceeding with respect to the same debtor before the ruling to recognise a foreigninsolvency proceeding, the court which is presiding over the recognition and assistance proceeding mustmake a ruling stipulated in either of the following items.

(i) If all of the requirements listed in each of the items in article 57(1) have been fulfilled, a rulingordering a suspension of that domestic insolvency proceeding.

(ii) If it does not correspond to a case listed in the preceding item, a ruling suspending the recognitionand assistance proceeding.

(2) The court may cancel a decision pursuant to the preceding paragraph.

(3) An immediate kokoku appeal may be made against a ruling pursuant to the preceding two paragraphs.




(5) In a case where there has been a decision under paragraph (3) and a decision with respect to animmediate kokoku appeal under the same paragraph, that written ruling must be served on the partiesinvolved.

Article 60 [Coordination between a ruling to recognise a foreign insolvency proceeding and a domesticinsolvency proceeding before a commencement ruling]13

(1) After there has been a ruling to recognise a foreign insolvency proceeding, in a case where it hasbecome clear that there has been a petition for commencement of a domestic insolvency proceedingwith respect to the same debtor (except in a case pursuant to paragraph (1) of the preceding article), thecourt which is presiding over the recognition and assistance proceeding must make a ruling as stipulatedin item (i) of the preceding paragraph14 in a case where the reasons listed in that same item exist.

(2) After there has been a ruling to recognise a foreign insolvency proceeding, in a case where it hasbecome clear that there has been a petition for commencement of a domestic insolvency proceedingwith respect to the same debtor (except in a case pursuant to paragraph (1) of the preceding article), if itfinds it necessary, on the petition of an interested party or on its own motion, the court which ispresiding over the recognition and assistance proceeding may make a ruling stipulated in item (ii) of thepreceding paragraph15 in a case where the reasons listed in that same item exist.

(3) The court may change a ruling pursuant to the preceding paragraph or cancel a ruling pursuant to thepreceding two paragraphs.

(4) An immediate kokoku appeal may be made against a ruling pursuant to the preceding three paragraphs.


(6) In a case where there has been a decision with respect to a decision under paragraph (4) and a decisionwith respect to an immediate kokoku appeal under the same paragraph, that written ruling must beserved on the parties involved.

Article 61 [Invalidity of a domestic insolvency proceeding and a foreign insolvency proceeding whichhave been suspended]

(1) In a case where a domestic insolvency proceeding has been suspended pursuant to article 57(2), article58(1), item (i) of paragraph (1) of article 59 or paragraph (1) of the preceding article, if a rulingcancelling the recognition of a foreign insolvency proceeding pursuant to item (iii) of paragraph (2) ofarticle 56 in respect of the same debtor becomes final and binding, the domestic insolvency proceedingceases to be effective.

(2) In a case where a recognition and assistance proceeding for a foreign insolvency proceeding issuspended pursuant to item (ii) of paragraph (1) of article 59 or paragraph (2) of the preceding article, ifa ruling to conclude a bankruptcy proceeding, a ruling to approve a compulsory composition, a ruling toapprove a rehabilitation plan, a ruling to approve a reorganisation plan, an order to perform an



arrangement or a ruling to conclude a special liquidation with respect to the same debtor becomes finaland binding, the recognition and assistance proceeding ceases to be effective.

Section 2 Treatment where there is another recognition and assistance proceeding for a foreigninsolvency proceeding (articles 62_64)16

Article 62 [Conditions etc for recognition where there has been recognition of another foreign insolvencyproceeding]

(1) In a case where there has been a petition for recognition of a foreign insolvency proceeding, if there is arecognition and assistance proceeding for another foreign insolvency proceeding in respect of the samedebtor for which a ruling for recognition has already been made, in a case which corresponds to either ofthe following items, the court must also l7 dismiss that petition.

(i) The other foreign insolvency proceeding is a foreign main proceeding.

(ii) In a case which is not a case falling within the preceding item, if the foreign insolvencyproceeding to which the petition relates is a foreign non-main proceeding, and it is found that it isnot in the general interests of the creditors for assistance measures pursuant to Chapter 3 to betaken in respect of that foreign insolvency proceeding.

(2) In a case where there has been a ruling to recognise a foreign insolvency proceeding, if there is anotherforeign non-main proceeding in respect of the same debtor for which a ruling to recognise a foreigninsolvency proceeding has been made, the recognition and assistance proceeding for the foreign nonmain proceeding is suspended. However, this does not apply if an order for suspension has been issuedpursuant to paragraph (1) of the next article.

Article 63 [Suspension order for another recognition and assistance proceeding before a recognitionruling for a foreign insolvency proceeding]

(1) If it finds it necessary, before making a ruling in respect of a petition for recognition of a foreigninsolvency proceeding, the court which is presiding over the recognition and assistance proceeding may,on the petition of an interested party or on its own motion, order the suspension of the recognition andassistance proceeding for a foreign non-main proceeding with respect to the same debtor for which aruling to recognise a foreign insolvency proceeding has been made. The same also applies if animmediate kokoku appeal is made under article 24(1) against a ruling dismissing a petition forrecognition of a foreign insolvency proceeding.

(2) A court may change or cancel an order for suspension pursuant to the preceding paragraph.

(3) An immediate kokoku appeal may be made against an order for suspension under paragraph (1) and aruling pursuant to the preceding paragraph.


(5) In the case where there is a decision pursuant to the preceding three paragraphs and a decision with



respect to an immediate kokoku appeal under the same paragraph, the written ruling must be served onthe parties involved.

Article 64 [Invalidity of a recognition and assistance proceeding which has been suspended]

In a case where a recognition and assistance proceeding for a foreign insolvency proceeding is suspendedpursuant to article 62(2) or paragraph (1) of the preceding article, if a ruling cancelling the recognition ofanother foreign insolvency proceeding has become final and binding pursuant to item (iii) of paragraph (1) ofarticle 56 in respect of the same debtor, the recognition and assistance proceeding ceases to be effective.

Chapter 6 Penal provisions (articles 65-69)

Article 65 [Offence of bribery]

(1) If a recognition trustee, provisional administrator, recognition trustee representative or a provisionaladministrator representative receives, demands or promises to take a bribe relating to their duties, he orshe will be subject to up to three years' imprisonment or a fine of up to 1,000,000 yen.

(2) If a recognition trustee or a provisional administrator (hereafter in this article "recognition trustee etc")is a juridical person, if an officer or employee engaged in the duties of recognition trustee etc receives,demands or promises to take a bribe relating to their duties, he or she will be subject to up to three years'imprisonment or a fine of up to 1,000,000 yen. In a case where the recognition trustee etc is a juridicalperson, if its officer or employee effects a receipt, demand or promise by the recognition trustee etc to

take a bribe relating to the duties of the recognition trustee etc 18, the same applies.

(3) The bribe received by an offender or a recognition trustee etc that is a juridical person will beconfiscated. If the whole or part of it cannot be confiscated, the value of it will be collected.

Article 66 [Offence of gift-giving]

A person who has provided, applied for or promised to give a bribe stipulated under paragraphs (1) or (2) of thepreceding article will be subject to up to three years' imprisonment or a fine of up to 1,000,000 yen.

Article 67 [Offence of refusing to report or investigate]

If a debtor, its legal representative, manager, director, supervising officer, auditor, liquidator, or any analogous

person of the debtor, refuses to report or investigate19 pursuant to article 41 (including a case where it appliesmutatis mutandis under article 55(1)), or makes a false report, he or she will be subject to up to one year'simprisonment or a fine of up to 500,000 yen.

Article 68 [Offence of disposition of assets and repatriation outside of Japan without approval]

(1) In a case where court approval is required to be obtained for a disposition or repatriation overseas of thedebtor's assets located in Japan or any other acts specified by the court pursuant to article 31(1), if adebtor who is an individual or his or her legal representative or supporter violates this, or if an officer oremployee of a debtor who is a juridical person violates this, he or she will be subject to up to one year'simprisonment or a fine of up to 1,000,000 yen.

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(2) If a recognition trustee, provisional administrator, recognition trustee representative or provisionaladministrator representative who is an individual violates article 35(1) (including a case where it appliesmutatis mutandis under article 55(1); similarly hereafter in this paragraph), or in a case where any ofthem are a juridical person, its officers or employees violate article 35(1), he or she will be subject to upto one year's imprisonment or a fine of up to 1,000,000 yen.

Article 69 [Offence committed outside of Japan]

The offences under paragraphs (1) and (2) of article 65 are subject to article 4 of the Criminal Code (Kei ho

Law No 45 of 1907 and the offence under article 66 is subject to article 2 of that law.20

Supplementary provisions

Article 1 [Date of enforcement]

This Law will come into force on the day stipulated by Cabinet Order within a period that does not exceed six

months calculated form the day that it was promulgated.21

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The remaining articles in the supplementary provisions deal with incremental amendments to other laws madenecessary by the enactment of this Law.

1 In relation to Japanese procedural law generally, "ruling" (kettei) and "decision" (saiban) refer to differentprocesses. "Decision" (saiban) has a broad meaning and refers to a court's conclusion on a specific matter. Areference to a "decision" (saiban) includes (1) "judgments" (hanketsu) which are rendered based on an oralarguments and (2) "rulings" (saiban) and (3) "orders" (meirei) both of which can be given without oralarguments. The difference between these three terms is as follows: "Judgments" (hanketsu) and"rulings" (ruling) are rendered by a court (which consists of either one judge or three judges), whereas an"order" may be made by a chief judge. "Rulings" and "orders" must be appealed in the form of a "kokoku"appeal, whereas "judgments" must be appealed in the form of a "koso" or ''jokoku'' appeal.

2 A kokoku appeal can be either a regular kokoku appeal or an immediate kokoku appeal. An immediate kokokuappeal must be made within a specified period (ie two weeks from the time the ruling was made under thisLaw).

3 In principle, a ruling becomes effective when notice with respect to the ruling is given. This provision createsan exception to the general principle.

4 This means that when a manager etc is obliged to make a petition for a bankruptcy proceeding etc inaccordance with another law, he or she may make a petition for a recognition and assistance proceedinginstead. By making a petition for a recognition and assistance proceeding his or her obligation to make apetition for a bankruptcy proceeding etc will be deemed to have been fulfilled.

5 "Formal disposition" (shubun) means the main part or a summary of the conclusion of a decision but it doesnot include the reasons for the conclusion.

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6 In principle, a ruling ceases to be effective when an immediate kokoku appeal is made. This provision is anexception to the general principle, because it provides that even if an immediate kokoku appeal is made, theruling remains effective. The use of the term shikko in the Japanese in this paragraph does not mean"compulsory execution"; rather, it means the effect of a function to realize the content of a decision. In general,the word "shikko" has two meanings: "compulsory execution" in a narrow sense, and "for a decision to becomeeffective" in a broad sense. In this Law, the word" shikko " is used in a broad sense in articles 25(7), 27(7), 28(6),30(4),32(6),51(6),57(5),58(5),59(4),60(5), and 63(4).

7 This bracketed exception relates to the issuing of a prohibition order under article 28(1). There may be a casewhere compulsory executions based on claims A and C are prohibited by an order pursuant to the first sentenceof paragraph (1), but a compulsory execution based on claim B is excluded from the order under the secondsentence of paragraph (1). In this case, the extension of time in paragraph (7) only applies to compulsoryexecutions based on claims A and C. Compulsory executions based on claim B have been excluded from theorder, so the holder of claim B may interrupt the period for prescription or limitation of time and does notrequire the extension to be applied to it.

8 In this paragraph, "documents containing the content" (sonomune wo kisai shita shomen) means documentson which it is written that the court issued a ruling changing or cancelling a management order, or that a rulingcancelling a ruling to recognise a foreign insolvency proceeding has become final and binding after amanagement order has been issued.

9 There is no heading in the Japanese text. This is called a "common heading"; in other words, articles 43 and44 both come under the same heading.

10 The word "cancellation" does not mean that the proceeding has been terminated without the purpose of theproceeding being achieved; rather, "cancellation" is used to refer to the normal way that a proceeding isterminated. Termination of a proceeding that has been commenced is otherwise provided for in article 61(2)and article 64.

11 There is no heading in the Japanese text because Chapter 4 consists of only one article. Thus, if it were tohave a heading, the heading for article 56 would be same as that of the Chapter.

12 "Elements of its reasons" means a summary of the court's reasons. This means that the public notice doesnot have to contain the whole of the reasons for the ruling.

13 That is, before a domestic insolvency proceeding has been commenced.

14 This is how the Japanese text is set out. It is a reference to item (i) of paragraph (1) of the preceding article.

15 Similarly to the preceding note, this is a reference to item (ii) of paragraph (1) of the preceding article.

16 Section 2 deals with the situation where there are two or more competing recognition and assistanceproceedings.

17 The use of the word "also" here means: "in addition to cases where the petition is dismissed pursuant to

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article 21".

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18 With respect to "effects a receipt, demand or promise", it is the recognition trustee, not its officer oremployee, who receives etc the bribe.

19 The use of the word "investigate" here refers to the debtor etc cooperating with or participating in aninvestigation of its affairs.

20 Article 2 of the Criminal Code provides that the Law applies to any person who commits the offences listedin that article outside of the jurisdiction of Japan. Article 4 of the Criminal Code provides that the Law appliesto Japanese public officials who committed the offences listed in that article outside of the jurisdiction ofJapan. The effect of article 69 of this Law, is that anyone who commits an offence under articles 65 and 66 willbe penalised even if he or she commits the offence outside of the jurisdiction of Japan.

21 This Law has been effective since 1 April 2001 (Cabinet Order No 54 of 2001).

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