Charlotte Bankruptcy Lawyer Bryan W. Stone of Arnold & Smith, PLLC answers the question “What is a small business bankruptcy ?”
In relative terms, Japan’s version of Chapter 11 bankruptcy is young. After fifteen years, however, the change in business culture the nascent bankruptcy law has wrought may be helping to shutter some of the world’s longest-running businesses.
Many of these businesses, as author William O’Hara told the Wall Street Journal in 1999, “are involved in basic human activities: drink, shipping, construction, food, guns.” O’Hara wrote a book called Centuries of Success that chronicled many of the world’s longest-running businesses.
Due to a unique business culture and relatively stable cultural norms, companies like Kongo Gumi—a construction company that specialized in building temples—operated for centuries. When, as The Atlantic reports, Kongo Gumi ran out of money in 2007 “and was absorbed by a larger company,” the business had been running continuously for 1,429 years.
In January, Minoya Kichibee—a seafood seller that specialized in preparing “salted squid guts using a 350-year-old recipe”—filed for bankruptcy, ending a 465-year continuous run in business. Minoya Kichibee’s bankruptcy followed last year’s shuttering of 533-year-old confectioner Surugaya.
While the rate of business bankruptcies in Japan is nowhere near that of companies in the United States, where, by comparison, only one in four companies founded in 1994 was still in business in 2004, the recent failure of so many of the company’s most venerable firms has some observers looking for answers.
While some blame shifting cultural norms, other observers point to the passage of Japan’s first Chapter-11 style bankruptcy law in 2000, followed by a rewrite in “laws concerning corporate liquidation” in 2004. These laws represented a dramatic change from the manner in which the Japanese government treated struggling companies, according to Ulrike Schaede, a professor of Japanese business at the University of California at San Diego.
Historically, Schaede told The Atlantic, Japanese banks were eager to provide struggling businesses with capital to keep them afloat. During a thirty-five year period from 1955 to 1990, Schaede said, only around seventy-two businesses in the country went bankrupt.
The 2000 bankruptcy law may have caused a shift in the dependability of banks as a source of bailout cash, Schaede said. Capitalism is about free entry into and free exit from business, and with a Chapter-11 style bankruptcy law, “Japan now has a free exit,” Schaede said.
Some of the “old-world companies” weathered the change, at least for a while, because as Schaede explained, the old banking culture persisted notwithstanding the new bankruptcy law. As time passed, however, banks grew reluctant to bailout non-performing companies unless they had a solid plan for change.
Companies like Minoya Kichibee evidently did not have a solid formula for change, and as William Rapp, a professor at the New Jersey Institute of Technology, told The Atlantic. Young people in Japan may not be that interested in traditional Japanese culture—at least not to the point of wanting to consume “traditionally prepared squid guts.”
If you find yourself needing the services of an experienced Charlotte, North Carolina bankruptcy attorney, please call the skilled lawyers at Arnold & Smith, PLLC find additional resources here. As professionals who are experienced at handling all kinds of bankruptcy matters, our attorneys will provide you with the best advice for your particular situation.
About the Author
Bryan Stone is a Partner with Arnold & Smith, PLLC, where he focuses his practice on all aspects of bankruptcy, including: Chapter 7, Chapter 11, Chapter 13, home loan modifications and landlord-tenant issues.
A native of Macon, Georgia, Mr. Stone attended the University of Georgia, where he earned a BBA in Banking and Finance, and Wake Forest University School of Law, where he obtained his law degree.
Following law school, Mr. Stone relocated to Charlotte, where he currently serves as Chair of “Bravo!” – a young professionals organization associated with Opera Carolina – and founded the University of Georgia Alumni Association of Charlotte.
In his spare time, Mr. Stone enjoys perfecting his barbeque skills for the annual “Q-City BBQ Championship” and playing softball in the Mecklenburg County Bar softball league.
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