Bankruptcy Act

A petition to commence bankruptcy proceedings under the provisions of this Act against an estate may be filed only if the decedent's address as of the time of commencement of succession or property that belongs to the estate exists in Japan.

A bankruptcy case relating to an estate is subject to the jurisdiction of the district court that has jurisdiction over the decedent's domicile as of the time of commencement of succession.

If there is no court with jurisdiction pursuant to the provisions of the preceding paragraph, the bankruptcy case relating to an estate is subject to the jurisdiction of the district court that has jurisdiction over the locality of property that belongs to the estate (in the case of a claim, the place where demand by litigation may be made).

For the purpose of application of the provisions of Article 5, paragraphs (8) and (9), and Article 7, item (v) to a bankruptcy case relating to an estate, the term "paragraphs (1) and (2)" in Article 5, paragraphs (8) and (9) is deemed to be replaced with "Article 222, paragraphs (2) and (3)", and the phrase "paragraph (1) or (2) of that Article" in Article 7, item (v) is deemed to be replaced with "Article 222, paragraphs (2) and (3)".

If two or more district courts have jurisdiction over a bankruptcy case relating to an estate pursuant to the provisions of the preceding three paragraphs, the bankruptcy case is subject to the jurisdiction of the district court with which the first petition to commence bankruptcy proceedings is filed.

For the purpose of application of Article 30, paragraph (1) to an inherited property, the phrase "when the court finds a fact constituting the grounds for the commencement of bankruptcy proceedings" in Article 30, paragraph (1) is deemed to be replaced with "when the court finds it impossible to pay debts to creditors of the succession and to legatees in full with the estate".

With regard to inherited property, in addition to an creditor of the succession or a legatee, an heir, administrator of the estate, liquidator of the estate, or executor (limited to an executor who has a right to conduct acts necessary for the administration of the estate; the same applies below in this Section) may file a petition to commence bankruptcy proceedings.

When a person stated in each of the following items files a petition to commence bankruptcy proceedings against the estate, they must make a prima facie showing of the fact specified in the respective items:

an creditor of the succession or a legatee:the existence of the claim held by them and the fact constituting the grounds for the commencement of bankruptcy proceedings against the estate; and

an heir, administrator of the estate, liquidator of the inherited property, or executor:the fact constituting the grounds for the commencement of bankruptcy proceedings against the estate.

A petition to commence bankruptcy proceedings may be filed against an estate only within the period during which a request for division of property may be made pursuant to the provisions of Article 941, paragraph (1) of the Civil Code; provided, however, that if qualified acceptance is made or division of property is conducted, a petition to commence bankruptcy proceedings may be made until payment to creditors of the succession and legatees is completed.

When succession has commenced with regard to a debtor after a petition to commence bankruptcy proceedings is filed and before an order commencing bankruptcy proceedings is issued, the court may issue an order to continue the bankruptcy proceedings against the inherited property upon the petition of an creditor of the succession, a legatee, an heir, an administrator of the inherited property, liquidator of the inherited property, or executor.

The petition for continuation prescribed in the preceding paragraph must be filed within one month after the succession commences.

The bankruptcy proceedings prescribed in paragraph (1) is closed, if a petition for continuation prescribed in paragraph (1) is not filed within the period referred to in the preceding paragraph, when the period expires, and if a petition for continuation prescribed in paragraph (1) is made within the period stated in the preceding paragraph and a judicial decision to dismiss the petition becomes final and binding, when the decision becomes final and binding.

An immediate appeal may be filed against a judicial decision to dismiss the petition for continuation prescribed in paragraph (1).

When succession has commenced with regard to the bankrupt after an order commencing bankruptcy proceedings is issued, the court continues the bankruptcy proceedings against the estate.

An order commencing bankruptcy proceedings against an inherited property does not preclude qualified acceptance or division of property; provided, however, that the procedures for qualified acceptance or division of property is suspended until an order of reversal of the order commencing bankruptcy proceedings or an order of discontinuance of bankruptcy proceedings becomes final and binding, or an order of completion of bankruptcy proceedings is issued.

If an order commencing bankruptcy proceedings is issued against an estate, any property that belongs to the estate (irrespective of whether it exists in Japan) is to constitute the bankruptcy estate. In this case, rights that the decedent held vis-à-vis an heir are deemed not to have been extinguished.

If an order commencing bankruptcy proceedings is issued against estate after an heir has disposed of all or a part of the estate, rights that the heir holds with regard to counter-performance belong to the bankruptcy estate.

In the case prescribed in the preceding paragraph, if the heir has already received the counter-performance stated in that paragraph, the heir must return the counter-performance to the bankruptcy estate; provided, however, that if the heir did not know at the time of receiving the counter-performance, the fact constituting the grounds for the commencement of bankruptcy proceedings or the fact that the filing of a petition to commence bankruptcy proceedings has been made, it is sufficient for the heir to return the benefit that they hold.

If an order commencing bankruptcy proceedings is issued against an estate, the following persons must give a necessary explanation concerning bankruptcy upon a request of a bankruptcy trustee or creditors' committee, or a request based on a resolution at a creditors' meeting:

a person that was the decedent's agent;

an heir and their agent; and

an administrator of the estate, liquidator of the estate, and an executor.

The provisions of the preceding paragraph apply mutatis mutandis to a person that was any of the persons listed in item (ii) or (iii) of that paragraph.

The provisions of Article 37 and Article 38 apply mutatis mutandis to heirs and their legal representative and manager when an order commencing bankruptcy proceedings is issued against the estate.

If an order of commencement bankruptcy proceedings is issued against an estate, an creditor of the succession and a legatee may participate in bankruptcy proceedings with regard to the entire amount of their claims even when an order commencing bankruptcy proceedings is issued against an heir.

If an order commencing bankruptcy proceedings is issued against an estate, claims held by an creditors of the succession take precedence over claims held by a legatee.

If an order commencing bankruptcy proceedings is issued against an estate, rights that an heir held vis-à-vis the decedent are deemed not to have been extinguished. In this case, an heir has the same rights as an creditor of the succession with regard to a claim that they held vis-à-vis the decedent.

In the case prescribed in the preceding paragraph, when an heir has made payment to an creditor of the succession or conducted any other act that causes the debts to be extinguished with their own property, the heir may exercise rights that the creditor of the succession held vis-à-vis the decedent to the extent of the amount paid by the heir.