📖 Approx. 3 minutes ／ Updated 2026.06.12
This article explains reconstruction methods for medical corporations facing excess liabilities. It compares four schemes: civil rehabilitation, corporate reorganization, private workout, and sponsor-led M&A, and presents the optimal solution for maintaining medical continuity.
Current Status of Civil Rehabilitation for Medical Institutions Based on Industry Data
According to research by Tokyo Shoko Research, the number of bankruptcies and business closures in the medical industry (hospitals, clinics, dental clinics) has remained high in recent years. In 2024, the business environment is particularly challenging for small and medium-sized medical institutions due to revisions in medical fees, soaring labor costs, and rising energy prices.
The Ministry of Health, Labour and Welfare’s Survey of Medical Institutions shows months where the number of clinic closures has exceeded new openings, making early consideration of business succession essential for maintaining regional healthcare.
Major Factors Leading to Business Deterioration
- Impact of Medical Fee Revisions: Reductions in insurance medical treatment unit prices, stricter facility standards
- Soaring Labor Costs: Difficulty in hiring nurses, pharmacists, and administrative staff, and pressure for wage increases
- Burden of Capital Investment: Electronic health record updates, CT/MRI replacements, advancement of medical equipment
- Aging of Directors and Lack of Successors: Delays in decision-making and lack of a succession system
- Decrease in Patient Numbers: Decline in outpatient numbers in depopulated areas, increase in competing medical institutions
- Rising Interest Rate Environment: Increased burden of interest on borrowings and difficulty in refinancing
10 Early Warning Signs of a Business Crisis
- Current ratio falls below 100% (worsening short-term payment ability)
- Medical business profit margin falls below the industry average (5-8%) for three consecutive periods
- Notices of seizure of medical fees or tax delinquency occur
- Requests for additional loans from financial institutions are rejected
- Negotiating for deferral of lease payments or rent payments
- Delayed salary payments, bonus cuts
- Cancellation of medical equipment maintenance contracts
- Requests for cash transactions from pharmaceutical wholesalers
- Successive staff resignations
- Requests for additional personal guarantees from the director
Options and Resolution Schemes
When facing business difficulties, options are considered in stages according to the severity of the situation.
- Stage 1: Business Improvement (Early) – Cost structure reform, revenue enhancement measures, expansion of credit lines
- Stage 2: Business Succession M&A (Mid-term) – Secure transfer consideration through group affiliation or third-party succession
- Stage 3: Private Workout / Sponsor-led M&A (When debt adjustment is necessary) – Succession to a sponsor company after consultation with creditors
- Stage 4: Legal Reorganization (Last resort) – Reconstruction through civil rehabilitation/corporate reorganization, or liquidation through bankruptcy
Succession “While Still Healthy” is Overwhelmingly Advantageous
In cases of reorganization after falling into excess liabilities or bankruptcy, the transfer consideration is often zero or negative, and only the director’s personal guarantee debt remains.
On the other hand, if third-party succession is chosen while the business is profitable, fair transfer consideration based on the business value can be secured, and the maintenance of staff employment, continuous patient care, and regional medical continuity can all be achieved.
Our firm’s support track record shows an average period from consultation to closing of 6-10 months for clinics without beds and 9-18 months for medical corporations. Early consultation when signs of business deterioration appear leads to the best outcome.
Frequently Asked Questions
Q. Is it possible to transfer the business even if it has excess liabilities?
A. Yes, it is possible. There are schemes such as sponsor-led M&A and third-party succession involving creditor adjustments. Our firm has extensive experience supporting cases with excess liabilities.
Q. Will my creditors or staff know that I have consulted you?
A. Information is disclosed only to a limited extent after signing an NDA, and there is no need to disclose it to related parties before the final contract. We strictly maintain confidentiality.
Q. What happens to the director’s personal guarantee?
A. It depends on the transfer scheme. In group-participation M&A, the release of guarantees is incorporated as a condition of transfer. The Guidelines for Management Guarantees can also be utilized.
Q. Will I receive more proceeds from a succession than from bankruptcy?
A. Almost certainly, yes. In bankruptcy, there is usually little left after liquidation costs and debt repayment, whereas with succession, proceeds based on business value can be secured.
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- Complete Guide to Tax Schemes for Medical Corporation M&A | Key Issues for Tax Accountants and CPAs to Consider
- Step-by-Step Guide to Medical M&A and Hospital Succession | Explaining the 6 Steps from Consultation to Closing with Real Examples
To Medical Institutions Facing Management Challenges
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