japan bankruptcy law
Sunday, May 23rd, 2010
Japan On The Brink
March 2nd 2009
Charles Malize
The sovereign nation of Japan should be concerned. Its economy, recently recorded its sharpest contraction in three and half decades for the October –December quarter of 2008. It appears Japan is facing its worst economic crisis since the end of the Second World War. The dismal Gross Domestic Product (GDP) data prompted government officials as well as the ruling coalition law makers to study the possibility of a fresh economic stimulus package. The slow down in the world’s second largest economy is larger than that being experienced in the United States and Europe.
Export dependency:
Japan has become more dependent on sales abroad for its growth over the last decade.
They produce high end durable products, which are sensitive to credit conditions. Users normally borrow to buy these products. In that sense, Japan is vulnerable. They have been hit particularly hard by falling global demand. Exports, mostly electronics and cars have slumped and production has been slashed.
Local consumers have also cut back and with the alarming rise in unemployment, Japanese companies like their counterparts in many parts of the world, have struggled. The recession has hit sales making it harder to raise funds.
Company bankruptcies:
Companies filing for bankruptcy in Japan have jumped 24.7 percent in December from a year earlier. Data from the research firm, Tokyo Shoko showed that 1,362 companies filed for bankruptcy in January of this year alone. A total of 33 publicly traded companies went out of business in 2008, the most in a post war period. For 2008 as a whole, corporate bankruptcies rose 11percent, the most in eight years.
Political issues:
The current Prime Minister Taro Aso has a divided parliament and a fractured ruling party, which makes him vulnerable in the opinion polls.
The Finance minister (Mr.Nakagawa) resignation amid lawmakers accusation of an embarrassing drunkenness at a recent G7 (group of seven) briefing has further damaged Taro Aso’s administration.
He was in charge of the finance ministry and banking supervision post. A close ally of the prime minister, his resignation could provide a serious blow to the Taro Aso’s tenure. The latest opinion poll suggests fewer than 10 percent of the people support Taro Aso, who must call a general election by September.
Quagmire on monetary policy:
With its key rate close to zero, further cut in interest rate will do little to boost growth but should show the central banks commitment to shoring up the economy. On the other hand a reduction on rates would make it unprofitable for investors to trade in the already impaired money market.
Funding challenges for companies:
The Central Bank of Japan has taken some monetary measures to ease funding for companies. Recent statement from the governor of the central bank, suggest the economy is expected to remain in a severe state next quarter, and companies are expected to continue struggling in obtaining financing, as investors shun risk. According to the governor “we implemented these measures to ease concerns companies are having about funding. We have to assume that conditions for corporate financing will remain very severe.”
Confidence disintegrating amongst households:
Sentiment is close to the lowest level in at least 26 yrs. Domestic demand looking extremely weak with the fear of deflation resurfacing.
The economy is in a terrible shape and hope of a recovery in the interim is doubtful. This country is “behind the curve”. Japans economy slipped into recession, its first in seven years in the third quarter of last year. This is deepening as evidence shows the economy’s recession is the worst in 60 years. The best one can hope for in the next few quarters is to see a cessation in slow down. For Japan to recover, the United States and Chinese economies will have to take off first.
Investors should be pricing in a recession that could last longer than previously expected.
Contact: info@cmcapitalmarketresearch.com
www.cmcapitalmarketresearch.com
About the Author
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Japanese commercial law; containing the law of bankruptcy, of partnerships and companies and of bills of exchange, notes and checks in a systematic form $14.13 This historic book may have numerous typos and missing text. Purchasers can download a free scanned copy of the original book (without typos) from the publisher. Not indexed. Not illustrated. 1895 Excerpt: …a resolution for the dissolution of the company, at least half of the stockholders in number and value must be present. If a quorum is not present, the same rules apply as in the case of a li… |
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Worthlessness of corporate debt: American approach and Japanese approach (University of Washington. School of Law. Student papers) … |
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