The Structural Reform Plan: a ¥150 billion debt waiver and the retreat from general trading (1999)

The choice to survive, and the autonomy it cost

The core of this decision lay less in choosing between two roads — legal reorganization under the Corporate Rehabilitation Act, or total dependence on the banks — than in how far the company could accept a decision that placed its own survival in the banks’ hands. The estimate that a fifth of its 60,000 trading counterparties might fail in a chain reaction gave the rescue a cast less of keeping Kanematsu alive for its own sake than of averting a cascading blow to the Japanese economy. That President Kuraji broke the unit of management down as far as the individual section, and chose to take down the general trading house sign himself, amounted to a break with management that chases scale.

And yet, in exchange for coming back from the crisis, Kanematsu left real authority over investment decisions in the hands of bank-sent executives for a long time. Deals employees would later regret as a waste arose — the sale of the Indonesian natural gas interest among them — and the fifteen years until the dividend resumed kept putting the same question to the company: which comes first, financial soundness or managerial autonomy. What a company should hand over in order to survive — the choice made in 1999 remains a question asked again and again wherever businesses are being rebuilt today.