A panel of deputies from the government, the Japanese Bankers Association and the Japan Federation of Economic Organizations (Keidanren) has drafted guidelines to be observed when a bank forgives a corporate borrower's debts, panel sources said.
The draft calls for granting debt waivers only to corporate borrowers likely to return to the black within three years if it appears possible that the company will be able to eliminate its negative net worth within five years, the sources said Tuesday.
A negative net worth is a financial state where debts outweigh assets. In postbubble Japan, many firms' assets are smaller than they appear due to latent losses in their securities and loan portfolios.
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