2003 Reports

Restructuring distressed companies in Japan

The Program on Alternative Investments, under the aegis of the Center on Japanese Economy and Business and in cooperation with the Center for Japanese Legal Studies and the Japan Business Association of Columbia University, presented "Restructuring Distressed Companies in Japan" on November 20, 2003. The symposium featured Richard A. Gitlin, Chairman of Gitlin & Company; and William Seidman, Chief Commentator of CNBC and former Chairman of the Federal Deposit Insurance Company (FDIC) as well as former Chairman of the Resolution Trust Company (RTC). Commenting were Curtis Milhaupt, Fuyo Professor of Law at Columbia School of Law, who also serves as Director of the Center for Japanese Legal Studies; and Robert Fallon, currently a professional fellow at the Center on Japanese Economy and Business. Professor Hugh Patrick, Director of the Center on Japanese Economy and Business, moderated the discussion. Mr. Gitlin began with an analysis of the systemic structure, policies, and reservoir of political will necessary for successfully restructuring distressed companies in Japan. He discussed the three factors in light of recent developments, arguing there is reason to be more optimistic about the process of corporate restructuring in the near future. Other panelists were more cautiously optimistic, agreeing that there had been a number of favorable changes in Japan's institutions and policies of corporate restructuring. Mr. Seidman enumerated several stumbling blocks, linking current institutional problems to those that confronted prior reforms. Curtis Milhaupt cautioned that microeconomic factors affecting restructuring are not as favorable as the new institutional framework for restructuring. Mr. Fallon recounted his own experience in restructuring as a practitioner with an American financial concern working in Japan. Excerpts of the discussion are presented in this report, together with portions of the ensuing Q & A period.