, also known as Business Revitalization ADR, is a process increasingly used by companies in

Japan Japan ( ja, 日本, or , and formally , ''Nihonkoku'') is an island country in East Asia. It is situated in the northwest Pacific Ocean, and is bordered on the west by the Sea of Japan, while extending from the Sea of Okhotsk in the n ...

to adjust their debt. This out-of-court procedure was established in Japan in 2007 and is based on

Japanese Law The law of Japan refers to legal system in Japan, which is primarily based on legal codes and statutes, with precedents also playing an important role. Japan has a civil law legal system with six legal codes, which were greatly influenced by Ger ...

, specifically the Special Measures Law for Industrial Revitalization and Rebirth of Japan. It allows companies to forgo

bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...

proceedings and replaces previous voluntary debt adjustments under such as the "Guideline for Voluntary Debt Adjustment" (Shiteki Seiri Guideline). Although the procedure is named using the generic

alternative dispute resolution Alternative dispute resolution (ADR), or external dispute resolution (EDR), typically denotes a wide range of dispute resolution processes and techniques that parties can use to settle disputes with the help of a third party. They are used for ...

title, Turnaround ADR is not a procedure for resolving disputes. Rather, it offers a way for financially stressed companies to reassess and restructure debts.

Features

When a Turnaround ADR is applied, the

debtor A debtor or debitor is a legal entity (legal person) that owes a debt to another entity. The entity may be an individual, a firm, a government, a company or other legal person. The counterparty is called a creditor. When the counterpart of this ...

can maintain payment to business partners and customers. Only claims held by financial institutions participating in this procedure become subject to adjustment; if the relevant institutions reach consensus, the debts can be minimized. Turnaround ADR is frequently misunderstood in the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

and other Western nations because no equivalent procedure exists there. Applying for or initiating a Turnaround ADR is not considered a default triggering event. Rather, adopting a Turnaround ADR is considered a preferable procedure for financially distressed companies as it provides breathing space for such companies to focus on revitalizing their business. Such space is gained by the alleviation of debts against relevant financial institutions without adversely affecting integral business relationships with partners and customers. A private operator certified by the

Minister of Justice A justice ministry, ministry of justice, or department of justice is a ministry or other government agency in charge of the administration of justice. The ministry or department is often headed by a minister of justice (minister for justice in a ...

and the

Minister of Economy, Trade and Industry The is a member of the Cabinet of Japan and is the leader and chief executive of the Ministry of Economy, Trade and Industry. The minister is also a statutory member of the National Security Council, and is nominated by the Prime Minister of Japa ...

, provides mediation services in a Turnaround ADR. The Japanese Association of Turnaround Professionals (JATP) is the only private operator certified to provide mediation services for Turnaround ADR. In this role, JATP normally appoints a

mediator Mediator may refer to: *A person who engages in mediation * Business mediator, a mediator in business * Vanishing mediator, a philosophical concept * Mediator variable, in statistics Chemistry and biology *Mediator (coactivator), a multiprotein ...

from a network of corporate turnaround professionals. This mediator is responsible for implementing the Turnaround ADR procedure fairly and objectively.

References

{{reflist Japanese business law Finance in Japan