Yosuke Kanegae Partner Nagashima Ohno & Tsunematsu Trustees in Bankruptcy: Concepts and Principles of Assigning the Power of Controlling the Estate to Private Professionals from the International Perspective, Its Trends and Challenges International Conference on Creditors’/Debtors’ Rights and Remedies “Sustainable Development: Introducing Private Trustees in Bankruptcy and Developing Security Interests Regime”, Bangkok, Thailand, August 15, 2018 Yosuke Kanegae Partner Nagashima Ohno & Tsunematsu

Key issues What are the relevant cases? Who will be elected? Who is responsible for the costs? What work is involved? How does the monitoring system work?

What are the relevant cases? -A bankruptcy trustee is chosen in a “trustee case” or a “trustee case with a small prepayment” -In the case of corporate bankruptcy, a bankruptcy trustee is always appointed When a petition for bankruptcy is made, the court decides whether to proceed with bankruptcy by (i) rejecting the petition, (ii) appointing a trustee or (iii) designating the matter as a trustee case with a small prepayment. In a “trustee case” or a “trustee case with a small prepayment”, a bankruptcy trustee will be appointed at the time of the commencement of the proceeding. If the court decides not to commence and instead discontinue the bankruptcy proceedings, a bankruptcy trustee will not be appointed.

Who will be appointed? -A private professional (experienced lawyer) is appointed as a bankruptcy trustee since advanced legal knowledge is required for such task Under the Bankruptcy Act, the qualification required to be a bankruptcy trustee is not defined. However, in practice, it is common for the court to appoint a bankruptcy trustee from the list of experienced lawyers in the jurisdiction, taking into account the contents of the case and the layer’s experience. When a corporation files for bankruptcy, not only the name of the bankruptcy trustee to be appointed but also the name of the attorney’s law firm and address are registered.

Who is responsible for the costs? -The bankruptcy trustee's remuneration is paid based on the court's decision from the money used to pay dividends to creditors -The prepayment is at least JPY200,000 A bankruptcy trustee's work is conducted in the interest of all creditors involved, and the remuneration will be paid from the bankruptcy estate. Even if a bankruptcy estate does not exist, the prepayment is needed at the time of petition for bankruptcy, so this amount must be paid to the bankruptcy trustee from such prepayment. Standards of prepayment are as below; JPY200,000 for trustee case with a small prepayment, JPY 500,000~ for a trustee case (individual), and JPY 700,000~ for a trustee case (corporation).

What work is involved? -The bankruptcy trustee has a right to administer and dispose of property that belongs to the bankruptcy estate in bankruptcy proceedings The bankruptcy trustee represents all creditors. The bankruptcy trustee manages, dispenses and sells the estate on behalf of the bankrupt, and makes distribution equally to creditors. The ordinary businesses are as follows: Investigation of property: Check the contents of the petition and review of forwarded mail items Investigation of claims: Approval or disapproval of filed proof of claims Distribution: Preparation of distribution table and implementation of distribution

How does the monitoring system work? -The bankruptcy trustee is obligated to report to the court and creditors committee -The bankrupt can object to the calculation report -The bankruptcy trustee may be dismissed The bankruptcy trustee is obligated to report the work conducted not only to the court but also to creditors committee (if exists). A bankruptcy trustee, upon completion of relevant proceedings, shall submit a calculation report to the court and at a creditors meeting. The bankrupt and creditors may object to such calculation report. The court has authority to dismiss a bankruptcy trustee. The bankrupt, and all creditors involved, can file a motion to dismiss a bankruptcy trustee.

Thank you! Yosuke Kanegae Partner Nagashima Ohno & Tsunematsu Email: yosuke_kanegae@noandt.com Tel: +81-3-5889-7197(direct)