How Does Japan Handle Financial Institution Insolvency and Protect Depositors?

Japanese Attorney at Law - Bengoshi L.L.

• 17 min read

The failure of a financial institution—be it a bank, credit union, securities firm, or insurance company—presents challenges that extend far beyond those of a typical corporate insolvency. Given their pivotal role in the economy, including payment systems, credit creation, and the safeguarding of public savings and investments, financial institution insolvencies carry the potential for systemic risk and widespread public impact. Consequently, Japan, like other major economies, has developed a specialized and evolving legal and institutional framework to manage such crises, with a strong emphasis on protecting depositors and policyholders and maintaining overall financial stability. This article provides an overview of how Japan addresses the insolvency of its financial institutions.

The Evolution of Japan's Financial Institution Resolution Framework

Japan's approach to financial institution insolvency has undergone a significant transformation, particularly since the 1990s.

Pre-1990s: The Era of the "No-Failure Myth" (「不倒神話」 - Futō Shinwa)
For much of the post-World War II period, there was a prevailing belief—often referred to as the "no-failure myth"—that Japanese financial institutions would not be allowed to collapse. While general corporate insolvency laws like the Bankruptcy Act, Composition Act (now abolished), and Corporate Reorganization Act were theoretically applicable, actual failures were rare. When smaller institutions faced distress, solutions were typically orchestrated through administrative guidance from the Ministry of Finance (now the Financial Services Agency - FSA), often involving mergers with healthier institutions, with depositors fully protected. A deposit insurance system, established by the Deposit Insurance Act (預金保険法 - Yokin Hoken Hō) in 1971, existed but was largely dormant, as direct payouts to depositors were generally avoided.

The Post-Bubble Collapse and the Dawn of Reform:
The collapse of Japan's asset bubble in the early 1990s triggered a severe banking crisis, characterized by a massive surge in non-performing loans. This made the traditional ad-hoc, administratively guided rescue approach untenable. This period necessitated a fundamental rethinking of the resolution framework.

  • 1996 Reforms: The first significant legislative responses included amendments to the Deposit Insurance Act and the enactment of the Act on Special Measures for Reorganization Proceedings for Financial Institutions (金融機関等の更生手続の特例等に関する法律 - Kin'yū Kikan tō no Kōsei Tetsuzuki no Tokurei tō ni Kansuru Hōritsu, often referred to as the "Financial Reorganization Special Measures Act" or 更生特例法 - Kōsei Tokurei Hō). These reforms aimed to strengthen the deposit insurance system and introduced, for a temporary period, measures for full deposit protection (a "pay-off freeze" - ペイオフ実施凍結, peiofu jisshi tōketsu) while encouraging the use of court-led reorganization proceedings with special provisions for financial institutions.

The Financial Crisis of 1997-1998 and Subsequent Legislation:
A series of high-profile failures of major financial institutions in 1997-1998 underscored the remaining inadequacies of the system and prompted further urgent legislative action.

  • 1998 Reforms: These included the enactment of the (temporary, now expired) Act on Emergency Measures for the Revitalization of Financial Functions (金融機能の再生のための緊急措置に関する法律 - Kin'yū Kinō no Saisei no tame no Kinkyū Sochi ni Kansuru Hōritsu, or 金融再生法 - Kin'yū Saisei Hō). This law introduced crucial resolution tools such as the appointment of "financial administrators" (金融整理管財人 - kin'yū seiri kanzainin) to manage failed institutions and the concept of "bridge banks" (承継銀行 - shōkei ginkō). The Financial Reorganization Special Measures Act was also amended at this time to extend its coverage to securities firms, and the policyholder protection scheme for insurance companies was strengthened.

Establishment of a Permanent Framework and Adjustments for Global Standards:

  • 2000 Reforms: Many of the ad-hoc and temporary crisis measures from the 1998 Financial Revitalization Act were integrated into the Deposit Insurance Act, creating a more permanent and comprehensive resolution framework. This included formalizing the financial administrator scheme and introducing measures for "special crisis management" (特定危機管理 - tokutei kiki kanri), which essentially allows for temporary nationalization in systemic crises. The Financial Reorganization Special Measures Act was also further amended to cover insurance companies.
  • Post-Lehman Shock (2008) and International Alignment: The global financial crisis of 2008 provided fresh impetus for strengthening resolution regimes worldwide. Japan participated in international efforts, led by bodies like the Financial Stability Board (FSB), to establish common principles for the effective resolution of financial institutions, encapsulated in the FSB's "Key Attributes of Effective Resolution Regimes for Financial Institutions."
  • 2013 Reforms to the Deposit Insurance Act: In line with these international standards, Japan significantly amended its Deposit Insurance Act in 2013 to introduce a new framework for the "orderly resolution of financial institutions" (金融機関等の資産及び負債の秩序ある処理に関する措置 - kin'yū kikan tō no shisan oyobi fusai no chitsujo aru shori ni kansuru sochi). This regime is designed to manage the failure of systemically important financial institutions (SIFIs) in a way that minimizes systemic disruption and avoids exposing taxpayers to losses (addressing the "Too Big To Fail" problem). This framework explicitly covers not only deposit-taking institutions but also securities firms, insurance companies, and other entities designated as systemically vital.

Depositor Protection: The Role of the Deposit Insurance Corporation of Japan (DICJ)

The Deposit Insurance Corporation of Japan (預金保険機構 - Yokin Hoken Kikō, or DICJ), established under the 1971 Deposit Insurance Act, is the cornerstone of depositor protection in Japan.

Mandatory Insurance System:
Participation in the deposit insurance system is generally mandatory for banks, credit unions (shinyō kumiai), credit associations (shinyō kinko), labor banks (rōdō kinko), and other designated deposit-taking financial institutions operating in Japan (Deposit Insurance Act, Art. 49(1)). These member institutions pay regular insurance premiums to the DICJ, typically calculated based on the volume of their insured deposits (Arts. 50, 51).

Insured Events and Protection Mechanisms:
An "insurance event" (保険事故 - hoken jiko) that triggers DICJ intervention includes events such as the suspension of deposit withdrawals by a financial institution, the revocation of its banking license, the commencement of bankruptcy proceedings against it, or a formal resolution for its dissolution (Art. 49(2)). When such an event occurs, the DICJ employs two primary mechanisms to protect depositors:

  1. Insurance Payouts (Pay-Offs) (保険金支払方式 - Hokenkin Shiharai Hōshiki) (Deposit Insurance Act, Art. 53):
    • This is the direct payment by the DICJ of insured deposits to the depositors of the failed institution.
    • General Coverage Limit: The standard coverage limit is JPY 10 million per depositor, per financial institution, covering principal, plus any accrued interest on that principal (Deposit Insurance Act Order, Art. 6-3).
    • Full Protection for "Payment and Settlement Deposits" (決済用預金 - Kessai-yō Yokin): Certain types of deposits that meet specific criteria—namely, being non-interest-bearing, redeemable on demand, and used for payment and settlement services (e.g., current accounts, certain types of ordinary non-interest-bearing deposits)—are fully protected without being subject to the JPY 10 million cap (Deposit Insurance Act, Art. 54-2). This permanent full protection for settlement accounts was introduced after periods of temporary broader deposit guarantees (often termed a "pay-off freeze") during past financial crises, with the last of these temporary full protections for general deposits expiring in April 2005.
    • Upon making these insurance payments, the DICJ is subrogated to the depositors' claims against the failed institution for the amounts paid (Art. 58).
    • Purchase of Uninsured Deposit Portions: The DICJ also has the authority to purchase the portion of deposits that exceeds the insured limits from depositors (Art. 70(1)). It can then make an estimated interim payment to these depositors based on the anticipated recovery from the failed institution's assets (Art. 71), with the possibility of further payments if actual recoveries are higher (Art. 70(2)).
  2. Financial Assistance (資金援助 - Shikin Enjo) (Deposit Insurance Act, Art. 59 et seq.):
    • This is often the preferred method for resolving a failed institution, as it can ensure the continuity of banking services and preserve more of the institution's value than a direct payout and liquidation.
    • Under this approach, the DICJ provides financial assistance to a healthy "assuming institution" (救済金融機関 - kyūsai kin'yū kikan) or to a temporary "bridge bank" (承継銀行 - shōkei ginkō, see below) to facilitate the transfer of the failed institution's business, including its insured deposits and generally its sound assets, through a merger or a business transfer agreement.
    • Financial assistance can take various forms, such as monetary grants, loans to the assuming institution, or the purchase of distressed assets from the failed institution's portfolio by the DICJ (Art. 59).
    • The amount of financial assistance provided by the DICJ is generally capped by the estimated cost that would have been incurred if a direct insurance payout (pay-off) had been made (this is known as the "pay-off cost cap" principle) (Art. 64(2)). However, during periods of severe financial crisis or systemic risk, provisions for "special financial assistance" that could exceed this cap have been available and can still be deployed under certain extraordinary circumstances (e.g., Art. 102(1)(ii)).

Resolution Schemes for Deposit-Taking Institutions under the Deposit Insurance Act

Japan has developed sophisticated administrative resolution regimes under the Deposit Insurance Act to manage the failure of deposit-taking financial institutions swiftly and effectively, often working in conjunction with, or as an alternative to, formal court-led insolvency proceedings.

A. Administration by a Financial Administrator (金融整理管財人 - Kin'yū Seiri Kanzainin) (Deposit Insurance Act, Art. 74 et seq.)

  • Trigger: The Prime Minister (acting through the FSA) can order a financial institution to be placed under the administration of a Financial Administrator if there is a finding that the institution is insolvent or at risk of suspending deposit withdrawals, AND that its continued operation by its existing management is inappropriate, or its failure would cause disruption to regional finance or significant inconvenience to its users due to deficiencies in its business operations.
  • Process: Upon such an order, a Financial Administrator (typically one or more lawyers or financial experts appointed by the DICJ following the Prime Minister's designation) assumes exclusive control over the failed institution's business operations, assets, and management rights, effectively displacing the existing board and executives (Art. 77).
  • Objective: The Financial Administrator's primary role is to maintain essential banking services, conduct a thorough investigation into the institution's affairs (including pursuing claims against former management for any wrongdoing, under Art. 83), and, most importantly, seek a prompt and orderly transfer of the viable parts of the business (especially insured deposits and sound assets) to a financially sound assuming institution or to a Bridge Bank. This transfer is often facilitated by financial assistance from the DICJ.
  • Facilitating Asset Transfers: To expedite such transfers, particularly if the failed institution is insolvent, the Act allows for a court order to substitute for the normally required shareholder approval for a business transfer (this is known as the "substitute permission system" - 代替許可制度, daitai kyoka seido) (Art. 87).
  • Timeline: The period of administration by a Financial Administrator is generally limited to one year, though it can be extended for one additional year with the Prime Minister's approval if unavoidable circumstances necessitate it (Art. 90).

B. Bridge Banks (承継銀行 - Shōkei Ginkō) (Deposit Insurance Act, Art. 91 et seq.)

  • Purpose: A Bridge Bank is a temporary financial institution established by the DICJ as its subsidiary when an immediate transfer of a failed institution's business to a private-sector assuming institution is not feasible.
  • Function: The Bridge Bank takes over the essential banking functions and insured deposits of the failed institution, continuing to provide services to customers for a limited period. Its primary role is to maintain financial stability and service continuity while a more permanent solution—such as a sale of the Bridge Bank's operations to a final private-sector buyer (referred to as a 再承継金融機関 - sai-shōkei kin'yū kikan)—is sought (Art. 101).
  • Operational Period: Bridge Banks are typically intended to operate for a maximum of two years, although this can be extended by one additional year with the Prime Minister's approval (Art. 96).

C. Special Crisis Management (特定危機管理 - Tokutei Kiki Kanri) (Temporary Nationalization) (Deposit Insurance Act, Art. 102(1)(iii))

  • This is an extraordinary resolution measure reserved for situations where the failure of a financial institution poses a risk of causing "extremely serious disruption to the maintenance of the credit order" either in Japan as a whole or in a specific region where the institution operates – essentially, a systemic crisis.
  • If the Prime Minister, after deliberation with the Council for Financial Crisis Response (金融危機対応会議 - kin'yū kiki taiō kaigi), determines that other available resolution measures (including special financial assistance from the DICJ) are insufficient to avert such a systemic crisis, this "third type of measure" (第3号措置 - dai san-gō sochi) can be invoked.
  • Under this measure, the DICJ can be ordered to acquire all (or a controlling portion of) the shares of the failing financial institution, effectively placing it under temporary state control (Arts. 111, 112). The DICJ then appoints new management (Art. 114) and oversees the institution's operations with the primary goals of stabilizing it, ensuring the continuation of essential financial services, and ultimately returning it to the private sector through a sale or other appropriate means as quickly as feasible (Art. 120(1)). The former management of the nationalized institution is also subject to investigation for responsibility for the failure (Art. 116).
  • This temporary nationalization is funded through a special "Crisis Management Account" (危機対応勘定 - kiki taiō kanjō) established within the DICJ. This account is primarily funded by special contributions from other financial institutions, but in exceptional circumstances, it can also receive financial support (subsidies) from the government if the financial industry contributions are insufficient to cover the costs of the resolution (Arts. 121, 122, 125).

Framework for Orderly Resolution of Systemically Important Financial Institutions (SIFIs) (2013 Reforms)

Reflecting global efforts to address the "Too Big To Fail" (TBTF) problem after the 2008 financial crisis, Japan amended its Deposit Insurance Act in 2013 to introduce a specific framework for the "orderly resolution of the assets and liabilities of financial institutions, etc." (金融機関等の資産及び負債の秩序ある処理に関する措置) (Deposit Insurance Act, Art. 1, Art. 126-2 et seq.).

  • Objective and Scope: This regime is designed to enable the resolution of a failing SIFI in a manner that maintains the stability of the overall financial system and avoids exposing taxpayers to loss. Its scope is broad, covering not only traditional deposit-taking institutions but also securities firms, insurance companies, and other financial entities that are designated by government ordinance as playing a systemically important role in Japan's financial system (Art. 126-2(2)).
  • "Specified Management" by DICJ (特定管理 - Tokutei Kanri) (Art. 126-5): A core tool is the power for the Prime Minister to order a SIFI that is insolvent or likely to become so, and whose failure could trigger systemic disruption, to be placed under the "specific management" of the DICJ. This is similar in effect to the Financial Administrator regime but is directly managed by the DICJ itself and tailored for SIFIs.
  • Key Powers and Features for SIFI Resolution:
    • Ensuring Performance of Systemically Critical Obligations (Arts. 127-2, 127-4): To prevent contagion, the DICJ, when managing a SIFI, can provide funds to the institution to ensure the continued performance of obligations that are deemed critical to the stability of the financial system (e.g., settlement of derivatives or interbank transactions). Payments made using these DICJ funds can, with court permission, be exempted from avoidance (clawback) if the SIFI subsequently enters formal insolvency proceedings.
    • Facilitated and Expedited Business Transfers (Arts. 126-13, 126-33): The framework includes provisions to enable the very swift transfer of the SIFI's critical functions and viable business units to a sound private acquirer or a bridge institution. To ensure speed and certainty, these transfers can be executed with waivers or substitutions for certain standard court approvals or shareholder votes that would normally be required under general insolvency laws or corporate law (Art. 126-33). The DICJ can provide financial assistance (referred to as "equitable financial assistance" - 衡平資金援助, kōhei shikin enjo) to the acquirer to cover any valuation shortfalls and ensure that creditors of the transferred business are not unfairly prejudiced by the expedited transfer (Art. 126-31 applying Art. 59-2 mutatis mutandis).
    • Temporary Stay on Early Termination Clauses in Financial Contracts (Art. 137-3): Recognizing that the mass early termination of financial contracts (especially derivatives) triggered by an institution's entry into resolution can itself be a major source of systemic instability (as seen in the 2008 crisis), the Act allows the Prime Minister to order a temporary stay on the exercise of such early termination rights by counterparties. This stay would be for a limited period deemed necessary to implement orderly resolution measures (e.g., to facilitate the transfer of the SIFI's derivatives portfolio to a stable entity). This is a significant power that can override contractual rights in the interest of broader financial stability, and it contrasts with general insolvency principles that often allow such termination clauses (ipso facto clauses) to operate.

Role of Court-Led Insolvency Proceedings and the Financial Reorganization Special Measures Act

While the Deposit Insurance Act provides a powerful suite of administrative resolution tools, formal court-led insolvency proceedings—namely Bankruptcy (破産 - hasan), Civil Rehabilitation (民事再生 - minji saisei), and Corporate Reorganization (会社更生 - kaisha kōsei)—remain available as potential frameworks for resolving the affairs of a failed financial institution.

The Financial Reorganization Special Measures Act (更生特例法 - Kōsei Tokurei Hō) provides specific modifications and special rules that apply when these general insolvency laws are used for financial institutions. Key aspects include:

  • Expanded Applicability to Various Financial Institution Types:
    • Crucially, the Act extends the applicability of Corporate Reorganization proceedings (which are normally only for stock companies) to cooperative-type financial institutions such as credit unions (信用協同組合 - shinyō kyōdō kumiai) and credit associations (信用金庫 - shinyō kinko), as well as labor banks (労働金庫 - rōdō kinko) (Financial Reorganization Special Measures Act, Art. 3 et seq.). This recognizes that these non-stock company entities also play vital roles, especially in regional economies, and may require the robust tools of Corporate Reorganization for their rehabilitation.
    • The Act also applies to securities firms and insurance companies, tailoring the general insolvency procedures to their specific needs.
    • More recently, its scope was expanded to explicitly cover the resolution of Japanese branches of foreign banks (Art. 377 et seq. of the Act).
  • Role of Regulatory Authorities in Initiating Court Proceedings:
    The supervisory authority for financial institutions (e.g., the Prime Minister, acting through the FSA) is granted the power to petition the court for the commencement of insolvency proceedings (such as Corporate Reorganization under Art. 377 of the Act) against a financial institution if the relevant grounds (e.g., risk of bankruptcy) exist. This allows regulators to proactively initiate court proceedings when they deem it necessary for the public interest, depositor protection, or overall financial stability, rather than waiting for the institution itself or its creditors to act.
  • Procedural Role of the DICJ (or Equivalent Bodies for Securities/Insurance):
    In court-led insolvency proceedings involving financial institutions, the DICJ (or the Investor Protection Fund in the case of securities firms, or the Policyholder Protection Corporations in the case of insurance companies) is given significant procedural rights and responsibilities to represent the interests of numerous, often dispersed, depositors, investors, or policyholders (Financial Reorganization Special Measures Act, Art. 386 et seq. for DICJ). This includes:
    • Streamlined Notifications: Court notifications that would normally go to all individual depositors can often be made to the DICJ instead, simplifying administration (Art. 386 of the Act).
    • Collective Representation and Claim Filing: The DICJ can prepare and file with the court a list of depositors and their insured claims (a "depositor schedule" - 預金者表, yokinsha-hyō), which is then generally deemed to constitute a formal proof of claim by each listed depositor (Arts. 391-393 of the Act). The DICJ can then act on behalf of these depositors in many aspects of the proceedings, such as voting on a reorganization plan (Art. 395 of the Act).
    • Safeguards for Individual Rights: While providing for collective representation, the system also includes safeguards allowing individual depositors to "opt-out" of the DICJ's representation and participate directly in the proceedings if they choose (Art. 394 of the Act).
    • Fiduciary Duties of DICJ: When acting in this representative capacity, the DICJ is subject to duties of fairness, sincerity, and due care towards the depositors whose interests it is representing (Art. 396 of the Act).

Specific Considerations for Securities Firms and Insurance Companies

While the above frameworks apply broadly, there are some specific nuances for securities firms and insurance companies:

Securities Firms:

  • Primary Protection via Customer Asset Segregation: The cornerstone of investor protection for clients of securities firms is the strict legal requirement under the Financial Instruments and Exchange Act (金融商品取引法 - Kin'yū Shōhin Torihiki Hō, FIEA) for firms to segregate customer-entrusted securities and cash from their own proprietary assets (FIEA, Art. 43-2). If this segregation is properly maintained, these customer assets do not form part of the securities firm's insolvency estate upon its failure and can be reclaimed by the customers.
  • Investor Protection Funds (投資者保護基金 - Tōshisha Hogo Kikin): As a secondary safety net, Japan has Investor Protection Funds. These funds provide compensation to retail customers (generally up to JPY 10 million per customer) if a failed securities firm is unable to return their segregated assets due to operational failures, misappropriation, or inadequate record-keeping (FIEA, Art. 79-56, Art. 79-57(3); Order for Enforcement of FIEA, Art. 18-12).
  • Resolution Approach: The resolution of failed securities firms typically prioritizes the prompt return of segregated customer assets and the orderly liquidation of the firm itself, rather than its reorganization as a going concern. This reflects the generally lower systemic impact on payment systems compared to bank failures. Court-led bankruptcy proceedings, with the special procedural support provided by the Financial Reorganization Special Measures Act (where the Investor Protection Fund plays a role similar to the DICJ), are a common route.

Insurance Companies:

  • Policyholder Protection Corporations (保険契約者保護機構 - Hoken Keiyakusha Hogo Kikō): Separate Policyholder Protection Corporations (PPCs) exist for the life insurance and non-life insurance sectors (Insurance Business Act - 保険業法, Hokengyō Hō, Art. 259 et seq.). Their primary function is not direct cash payouts to policyholders (unlike DICJ pay-offs), but rather to provide financial assistance to facilitate the transfer of the insurance policies of a failed insurer to a solvent acquiring insurer, or, if no acquirer can be found, to take over the policies themselves, either directly or through a specially created bridge insurance company (承継保険会社 - shōkei hoken kaisha). This emphasis on policy continuation reflects the unique nature of insurance contracts, where policyholders (especially in life insurance) might not be able to obtain comparable new coverage due to age or health status if their existing policies were simply terminated.
  • Coverage Levels for Policy Protection: The PPCs aim to protect a substantial portion of policyholders' contractual rights. For most policies, this typically involves protecting a high percentage (e.g., 90%) of the policy reserves (責任準備金 - sekinin junbikin) that the failed insurer should have held (Insurance Business Act, Art. 270-3). However, it's important to note that the protection is based on these reserves. If the terms of the transferred policies are modified (which is common), such as by reducing high guaranteed interest rates (yotei riritsu) that were a feature of older policies and a cause of many insurer failures, the actual future benefits received by policyholders might be lower than 90% of what they originally expected under the old contract terms, particularly for long-duration policies like annuities.
  • Resolution via Court-Led Corporate Reorganization: The Financial Reorganization Special Measures Act is particularly significant for the insurance sector. It explicitly makes insurance companies, including mutual insurance companies (相互会社 - sōgo gaisha, a traditional form for many Japanese life insurers which are not stock companies and thus not normally eligible for the standard Corporate Reorganization Act), eligible for Corporate Reorganization proceedings (Financial Reorganization Special Measures Act, Art. 168 et seq.). This has been the primary vehicle for restructuring several major failed life insurers in Japan. The Act includes numerous special provisions tailored to insurance reorganizations, such as:
    • Generally prohibiting the reorganization trustee from selectively terminating (rejecting) individual insurance policies based on their risk profile (e.g., cherry-picking healthy policyholders and rejecting those who are ill or elderly) (Art. 439 of the Act, restricting application of Art. 61 of the Corporate Reorganization Act). This is crucial for preserving the integrity of the insurance pool and protecting vulnerable policyholders who might otherwise be unable to obtain new coverage.
    • Allowing for the payment of certain matured insurance claims (e.g., death benefits) during the reorganization proceedings, even before a plan is confirmed, if financial assistance from the PPC is available to cover such payments, thereby ensuring that policyholders or their beneficiaries receive timely benefits when insured events occur (Art. 440 of the Act).
    • Providing specific rules for valuing policyholder claims (e.g., based on policy reserves or unearned premiums) (Art. 444 of the Act).
    • Clarifying how insurance policy terms (like reserve calculation methods or guaranteed interest rates) can be modified fairly and equitably within a reorganization plan, including provisions for "early surrender charges" (早期解約控除 - sōki kaiyaku kōjo) to discourage mass policy lapses that could destabilize the reorganizing insurer (Art. 445 of the Act).

Conclusion

Japan has forged a complex, specialized, and continually evolving legal and institutional framework to manage the unique challenges posed by the insolvency of financial institutions. This system has been significantly shaped by domestic financial crises, particularly since the 1990s, as well as by the need to align with international best practices in the wake of global financial instability. It seeks to achieve a difficult balance: protecting depositors, investors, and policyholders; maintaining the stability and credibility of the financial system as a whole; ensuring the orderly exit or restructuring of failed institutions; and minimizing the ultimate cost to taxpayers. Key components include robust deposit and policyholder protection schemes managed by dedicated public-private corporations (DICJ and PPCs), powerful administrative resolution regimes that allow for swift intervention and control by authorities (including tools for SIFI resolution), and the tailored application of general court-led insolvency laws (Bankruptcy, Civil Rehabilitation, and especially Corporate Reorganization) through the Financial Reorganization Special Measures Act. This comprehensive approach reflects the critical public policy considerations inherent in addressing failures within the vital financial sector.