The recent disaster hit a vast expanse of areas and caused heavy casualties, including those dead or missing in the tsunami. As a result, it is likely that a large number of debts have been left without the appropriate debt consolidation arrangements being made, such as filing for statutory bankruptcy proceedings or bankruptcy proceedings outside the legal framework, due to the debtor’s death or missing status.

It is concerned that mutual relief system members with claims against such debtors may face cash flow problems because of the inability to collect their debts. The Mutual Relief System for the Prevention of Bankruptcies of SMEs before the amendment did not entitle members in such a situation to apply for a mutual aid loan because the situation was not included in the requirements for receiving mutual aid assistance (i.e., reason for requesting mutual aid loans).

[Pre-amendment requirements for receiving mutual aid assistance]

• (1) An application has been filed for statutory bankruptcy proceedings (under the Bankruptcy Act, Civil Rehabilitation Act, etc.).
• (2) Banking transactions have been suspended with respect to bill transactions.
• (3) Bankruptcy proceedings outside the legal framework (a procedure whereby a lawyer entrusted by the debtor to make debt consolidation arrangements notifies the creditor that payment of the debt will be stopped) have been initiated for the debtor.
• (4) The bills drawn by the debtor have become “disaster-related dishonored bills” (bills granted a grace period before actually being dishonored through the listing on the nonpayment report and suspension of transactions, in recognition of nonpayment due to disaster), and payment of them has been stopped accordingly. (This item was added on April 8, 2011, upon the revision of the pertinent ministerial ordinance under the Great East Japan Earthquake-related SME Measures No. 13.)

The Ordinance for Enforcement of the Act on Mutual Relief System for the Prevention of Bankruptcies of Small and Medium Enterprises (Ministerial Ordinance) was revised and entered into force on April 22 in order to entitle mutual relief system members to request mutual aid loans for the reason of having “an uncollectible claim against a business owner dead or missing in a disaster.”

This amendment will provide for enhanced support for the financing of mutual aid members dealing with disaster-affected companies.

• Reference 1: Summary of the Mutual Relief System for Prevention of Bankruptcies of Small and Medium Enterprises (PDF:53KB)
• Reference 2: Post-disaster measures implemented under the Mutual Relief System for the Prevention of Bankruptcies of Small and Medium Enterprises (PDF:25KB)

April 22, 2011

Office for Business Stability, Business Environment Department, Small and Medium Enterprise Agency

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