Latest Amendments to the Act on Strengthening Industrial Competitiveness in relation to Turnaround ADR

I. Introduction
While the COVID‐19 pandemic has caused serious adverse effects on many industries worldwide, the number of corporate bankruptcy cases in Japan in fiscal year 2020 was its lowest in the last 20 years. Support measures implemented by the authorities and financial institutions contributed to the low number of corporate bankruptcies to a certain extent; however, such measures have also resulted in unforeseen side effects as well. As financial institutions have provided COVID‐19 support loans aggressively, debtor companies have begun to experience excessive debt problems. At the end of March 2021, the provision for loan losses across 107 major financial institutions was 3.645 trillion yen, up 24.6% from the previous year.1
Long‐term business deterioration and such excessive debts could lead to a rise in restructuring cases in the near future. Considering that financial debts would comprise the majority of such excessive debts incurred by financial institutions, outof‐court workout procedures like Turnaround Alternative Dispute Resolution (“Turnaround ADR”) will likely become increasingly important.

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