Cost reduction

Liquidation costs less than separate collection efforts by individual creditors.

Tax benefit

When a business declares bankruptcy, the creditors may write off corresponding trade receivables and file for VAT and income tax reduction with the tax authorities.

More advantageous

Filing of bankruptcy by a corporation may help the cause in the personal bankruptcy proceeding of the representative director of the corporation.

The recovery rate is higher in corporate bankruptcy than the rate of recovery through creditors’ individual compulsory execution.

Risk Reduction

In case of insolvency without a bankruptcy proceeding, each creditor may exercise rights individually and bring various criminal and civil actions including fraudulent conveyance actions. Bankruptcy proceedings prevent such risks by fair distribution.

Less Burden

Gains recognized from disposition of properties in a bankruptcy proceeding are not subject to taxation. Plus, taxes owed are repaid first, so it can help reduce the possible tax burdens on major shareholders who may be responsible for the tax liabilities of the corporation.