📖 Approx. 3 minutes ／ Updated 2026.06.14
Even medical corporations facing excess liabilities can be transferred. Experts explain practical aspects, including equity valuation, fund repayment schemes, creditor coordination, and handling of guarantee obligations.
Current State of Medical Corporations with Excess Liabilities: An Industry Data Perspective
According to research by Tokyo Shoko Research, the number of bankruptcies and closures in the medical industry (hospitals, clinics, dental clinics) has remained high in recent years. In 2024, the management environment is becoming increasingly challenging, particularly for small and medium-sized medical institutions, due to revisions in medical fees, soaring personnel costs, and rising energy costs.
The Ministry of Health, Labour and Welfare’s Survey of Medical Institutions shows months where the number of new clinic openings has been surpassed by closures, making early consideration of business succession essential for maintaining regional healthcare.
Major Factors Leading to Deteriorating Management
- Impact of Medical Fee Revisions: Reductions in insurance medical fee unit prices, stricter facility standards
- Soaring Personnel 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 underdeveloped succession systems
- 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 difficulties in refinancing
10 Early Warning Signs of Management Crisis
- Current ratio below 100% (deterioration of short-term payment ability)
- Medical profit margin below industry average (5-8%) for three consecutive periods
- Receipt of notices for seizure of medical fees or tax delinquency
- Rejection of requests for additional loans from financial institutions
- Negotiations for deferral of lease payments or rent
- Delayed salary payments, bonus cuts
- Cancellation of medical equipment maintenance contracts
- Demand for cash transactions from pharmaceutical wholesalers
- Successive resignations of staff
- Requests for additional personal guarantees from the director
Options and Resolution Schemes
When facing management difficulties, options are considered in stages depending on the severity of the situation.
- Phase 1: Management Improvement (Early Stage) – Cost structure reform, revenue enhancement measures, expansion of credit lines
- Phase 2: Business Succession M&A (Mid-term) – Secure transfer consideration through group affiliation or third-party succession
- Phase 3: Private Workout/Sponsor M&A (When Debt Adjustment is Necessary) – Succession to a sponsor company after creditor consultation
- Phase 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, leaving only the director’s personal guarantee obligations.
On the other hand, by choosing third-party succession while the business is profitable, it is possible to secure transfer consideration that appropriately values the business, while also achieving staff employment retention, continuity of patient care, and sustainability of regional healthcare.
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 at the first sign of management deterioration leads to the best outcome.
Frequently Asked Questions
Q. Is it possible to transfer a medical corporation even if it has excess liabilities?
A. Yes, it is possible. There are schemes such as sponsor M&A and third-party succession involving creditor coordination. We have extensive experience supporting cases with excess liabilities.
Q. Will my creditors or staff know if I consult 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 agreement. We maintain strict confidentiality.
Q. What happens to the director’s personal guarantee?
A. It depends on the transfer scheme. In group affiliation M&A, the release of the guarantee is incorporated as a condition of transfer. The Guidelines for Business Owner Guarantees can also be utilized.
Q. Is succession more profitable than bankruptcy?
A. It is almost certainly more profitable. In bankruptcy, there is little left after liquidation costs and debt repayment, whereas with succession, consideration based on business value can be secured.
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