What kind of company can apply for corporate rehabilitation?

Corporate rehabilitation is a system that can be applied for by a company that has the intention to continue its business and has a possibility of rehabilitation.

According to the current Debtor Rehabilitation and Bankruptcy Act, an application for corporate rehabilitation is possible even when the company is insolvent or when there is a concern that it may become insolvent.

In other words, even if the company is currently unable to repay some of its debts, it can consider rehabilitation if it can pursue normalization by adjusting its debts while continuing its business.

In particular, for a company like a manufacturing business that has secured fixed assets, production facilities, and personnel and whose operational base is still viable, rehabilitation may be considered before bankruptcy, in that even if it experiences a temporary deterioration in liquidity, it can restructure and recover through rehabilitation.

Corporate rehabilitation can be applied for by a company under the Commercial Act, a company under the Commercial Act (such as a stock company or a limited company), or an individual business operator (when certain requirements are met), and in cases where the company is currently in a state of excess debt, insolvency is expected soon, or it is judged that management normalization is possible through a rehabilitation plan.

When rehabilitation is applied for, the court temporarily prohibits debt collection, attachment, and the like before the commencement of rehabilitation (a preservative measure), and after the decision to commence rehabilitation, creditors are prevented from carrying out compulsory execution without the court's permission.

During this period, the company prepares a rehabilitation plan under the management of the court and, through consultation with creditors, obtains an opportunity to recover by reducing and repaying its debts in installments.

Because the legal procedures for corporate rehabilitation are highly specialized and complex, it is essential to carry out the procedure together with an attorney specializing in rehabilitation.

It is advisable to review and respond to matters such as the financial condition, the debt structure, and whether the business model is sustainable, with the help of an attorney experienced in corporate rehabilitation.