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Things to know if your employer is on verge of bankruptcy

13 Comments

The end of September will mark the midway point in the 2011 fiscal year, and -- due to economic repercussions from the March 11 earthquake, tsunami and nuclear plant meltdown -- some economists are predicting more bad news, in the form of ruinous mid-term financial results for many companies.

Nikkan Gendai (Sept 22) reports that according to the Teikoku Data Bank, as of Sept 11, some 314 companies had already filed for bankruptcy -- a rate 2.8 times higher than the same six-month period following the Hanshin-Awaji quake that devastated Kobe and environs in January 1995.

Bankruptcies tend to fall under two basic patterns: One, the company applies to the court and goes into receivership; and two, the company owner just shuts down operations and flees, leaving his creditors and employees to fend for themselves. This second type is being opted for by increasing numbers of small- and medium-sized businesses.

In many cases of corporate failure, workers' wages are in arrears. A 39-year-old man employed by an advertising production company said when the troubles began, he first began receiving wages two or three days behind schedule; but then the employer switched to incremental payments and in the end, fell behind for three months. By that time, efforts to contact the firm's president were futile.

The bankruptcy law requires failed companies to pay their workers 80% of their remaining salaries, but with a cap -- depending on the worker's age -- of between 880,000 to 2.96 million yen.

"In the case of a court-supervised bankruptcy, this will be overseen by a court-appointed attorney, says Yuka Inage, a paralegal specializing in labor and welfare. "Salary payment vouchers serve as evidence, and even if the payment itself is delayed, they will be essential to obtaining a settlement at some point down the road."

According to Inage, any accrued worker's pension is subject to the same conditions as the aforementioned salary: 80% of the total owed, with the same caps depending on the age of the worker. However any semi-annual bonus payments normally due to workers are excepted from such rules.

According to the labor laws, a company facing imminent bankruptcy is obliged to issue workers a pre-dismissal "teate" (stipend), equivalent to one month's wages, 30 days before it files with the court. But realistically, says Inage, the likelihood of receiving this, even when a worker requests one from his employer, is low.

In some ailing small companies, cases have been reported where workers actually chipped in with money from their own pockets to pay utility bills or gasoline and road tolls for company vehicles. Obtaining reimbursement for such outlays presents all kinds of legal problems, and often litigation is the only solution.

At the very least, workers should obtain a "rishokuhyo" (certificate of job separation), as they will be eligible for compensation starting from seven working days after they became jobless. The Hello Work public employment office will handle the paperwork. In cases where the company owner flees with no forwarding address, Hello Work can also be prevailed upon to issue such a certificate -- provided the worker can show his salary payment vouchers for the previous six months. So it's always a good practice to hang on to one's pay vouchers for as long as practical.

In general, health insurance on the company scheme will become invalid and workers will need to visit their local pension office and apply to switch to the National Health Insurance scheme. If you've been residing in company-subsidized housing or a dormitory, the company should negotiate with the building's owner to cover costs for your move. If you want to stay, you might be able to work out an arrangement with the landlord, but expect to pay a higher rent.

A final question arises: when a company's failure appears imminent, are employees permitted to carry off office equipment like PCs or copiers, or other items they might be able to sell? Definitely not a good idea, warns Nikkan Gendai, as they could very likely be slapped with charges of theft.

© Japan Today

©2020 GPlusMedia Inc.

13 Comments
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This is one article that will most likely bring up some painful memories for Ex-NOVA types.

It was a very public crucifixion which was totally unnecessary. Japan's government made every effort possible to get rid of the 8,000plus foreigners employed by NOVA. METI killed that company.

Although this article has a lot of good points to it, giving you some good details, it doesn't even touch on the pain, trauma. The frustration that comes with the whole ordeal.

Unlike the NOVA ordeal, Japanese won't have to worry too much. Japan won't let it's own go down. Daiei, Sogo, and countless others are still doing business. Sometimes they just change the name.

Be worried though if you're a foreigner working at a company with a high number of foreigners. J-Govt will let you go down.

Bankruptcy takes forever and it's meant to. Liquidation of the company takes forever and they hope most of you move and then they can say they couldn't contact you. After NOVA's collapse it was only a year ago that they sent out letters with claim forms to get the last little bit of salary that NOVA teachers could claim. Most of those teachers long gone. Go ahead, call them "Fly-jin"

Here's some good news: It's easy to find Nozom Saruhashi today. Monkeybridge got himself a new company and a new job. His Shabu Shabu never tasted so good. He walks the street without fear cause all those people that would do him some physical harm deported themselves. For him, it's just business as usual. Casualties of what Japanese feel is a different kind of war.

This article prepares you for the formalities of the process but not the pain of goodbyes. You can't imagine what it feels like to be uprooted against your will.

The one thing that this article does not say is this - "Don't put all your eggs in one basket" All the people I know who survived the NOVA collapse had other jobs and plenty of money saved up. They never put all their faith in the company as Japanese workers do. You have to keep some distance. You can still be committed to your work without going all in. As we've seen in the past. It takes only 1 or 2 bad apples at the top to spoil it for everyone.

Another thing to watch out for is when mid-level managers start saying "I'm not sure" or "I don't know". They always know and they've been told to keep you in the dark. They'll cut their own deals behind closed doors.

4 ( +7 / -3 )

Another thing to watch out for is when the yakuza who supply the potted palms and sanitized doormats for the head officer foyer take them away.

2 ( +2 / -0 )

Correction: head "office" foyer

1 ( +1 / -0 )

The sole reason one incorporates in a few different ways, is so that one or more of the owners cannot lose their personal assets. Only a fool keeps dumping his/her personal assets into a failing mess.

1 ( +1 / -0 )

Well Nova is just one example, but now with Japan still in a hangover from the daze after the so called bubble economy, who got Japan into this mess??

-3 ( +0 / -3 )

NetNinja and others have posted some good info for those who it maybe relevant to.

-1 ( +0 / -1 )

I once worked for a company that was heading for receivership, the first sign was the work load became lighter, mistakes? in our wage packets to the benefit of the company. The clincher was the tow truck loading up the bosses BMW in the carpark as it was being repossed

0 ( +0 / -0 )

Spelt repossessed wrong tut tut

0 ( +0 / -0 )

Christina: I thought the BMW was just getting another posse.

0 ( +0 / -0 )

It's also good to know the winning lotto number.

0 ( +0 / -0 )

It's very strange, when entrepreneur lozhit profit in his pocket, and damages paid by the state.

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NetNinja, I'd be interested to hear your theory on how METI killed NOVA. Do you go back as far as the first punishments against NOVA for bad business practices in the early 90s? Do you think (like me) that Nova should've been smacked harder from the beginning, rather than having been given so many, many toothless warnings?

Whatever happened with the GEOS bankruptcy? It was in the news for all of two days and I never seem to hear it brought into discussions.

0 ( +0 / -0 )

taj, I go pretty far back. I wasn't with the company when it started although I was aware of it's presence. I knew people who were going in, helping it get started. We could talk for hours about who's to blame and who did what.

Right now, the one thing I'd like to point out is this. We've seen a lot of companies go bankrupt. We've seen companies cause people to become ill and hurt the general public. Those companies are still standing, still operating.

NOVA despite all it flaws was an institution that even though it's singular focus was language still qualified as education. I know where there locations used to be. Some of those places are Gyudon shops and other worthless forms of capitalism that fail to serve society in a positive way.

Why is the government willing to step in and prop up companies that are failing and NOT even consider saving NOVA which was providing educational services. I believe it's because there were 8000+ foreigners that could be eliminated from Japanese society.

The government killed that company. Somewhere in there you'll find Ishihara's name and other right-wing conservatives that hated what NOVA represented and what it meant if Japanese continued to study English. NOVA's bankruptcy was not entirely it's own fault. They needed a little push.

-2 ( +0 / -2 )

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