Hair Removal Salon Bankrupt, Paid ¥300,000 But Can’t Get a Penny Back: “Do We Just Have to Accept It?” – Tokyo Shimbun Digital

News Highlights

J.Esthe, a hair removal salon operating in Tokyo (operating company: J.Esthe International), received an order to commence bankruptcy proceedings from the Tokyo District Court on November 27. The company operated approximately 40 stores, and many customers had entered into prepayment contracts worth hundreds of thousands of yen. However, there is little expectation of refunds. This is the second time the company has gone bankrupt, following a financial collapse in October 2022. Customers are expressing concerns like, “Do we have no choice but to accept this loss?”

M&A Medical Editorial Department’s Perspective

The bankruptcy of a hair removal salon serves as a case that reminds us of the importance of handling “prepaid liabilities” when considering M&A and business succession for medical institutions. It is not uncommon for medical institutions to receive prepaid amounts ranging from tens of thousands to hundreds of thousands of yen for services, especially in elective treatment course contracts. In particular, a second bankruptcy, as in the case of J.Esthe, suggests that the deterioration of its financial condition had progressed considerably. In M&A conducted under sound financial conditions, flexible negotiations with the acquiring party are possible regarding the treatment of prepaid liabilities (e.g., assumption, partial repayment, waiver). However, when a business is in decline and faces insolvency, not only does it become difficult to find potential buyers, but the funds for repayment to creditors (customers) are depleted, ultimately leading directly to customer detriment. When medical institutions face challenges such as a lack of successors or financial difficulties, consulting with M&A specialists at an early stage becomes the most critical task for the proper handling of liabilities, including “prepaid amounts,” and for minimizing the impact on patients and staff.

Points Raised by This News

• The difficulty in handling prepaid liabilities at hair removal salons shares common risks with elective treatment course contracts at medical institutions.
• J.Esthe’s second bankruptcy highlights the necessity of early action when signs of business deterioration appear.
• Negotiations for “debt assumption” in M&A offer more options when conducted during a period of sound financial health.
• The inability to refund customers is a prime example of direct detriment resulting from failed business succession.

Practical Questions Arising from This News

• If my clinic were to go bankrupt, what would happen to refunds for patients who have prepaid for elective treatment courses?
• When taking over a clinic through M&A, how would prepaid liabilities from the previous owner be handled?
• Is it too late to consult about M&A if the business is already in decline?

If You Feel “Should I Consult Too?”

As seen in the case of J.Esthe, once a bankruptcy is reported, refunds to customers become extremely difficult. For medical institutions with significant prepaid amounts from elective treatment course contracts, it is essential to consult with M&A specialists before signs of deteriorating financial conditions or a lack of successors become apparent. Early consultation is the best strategy for considering appropriate methods for handling liabilities, minimizing the impact on patients and staff, and achieving smooth business succession.

M&A Medical (CentralMedience Inc.) supports the business succession of medical corporations, hospitals, and clinics on a full success-fee basis as an M&A support institution certified by the Small and Medium Enterprise Agency. Consultations are kept strictly confidential. Free consultations are available here.