“The chances of recovery are close to zero.” *Zen Toshin*: “A scene of utter chaos and despair” that began with the “115 billion yen bankruptcy”

“The amount of unpaid receivables exceeds 1 million yen.” “We can’t pay rent or payroll.”

“Due to the bankruptcy, there is no prospect of receiving the sales proceeds that were scheduled to be deposited on July 15. The unpaid amount consists of sales made on or after June 15 and exceeds 1 million yen. If this continues, we won’t be able to pay the rent or the wages of our female staff…” (A woman who runs a snack bar in Tokyo)

On July 6, “Zentōshin,” a credit card early settlement agency, filed for quasi-bankruptcy. The company operated a service that advanced funds to member merchants, paying them before the credit card companies did.It did business with over 200,000 establishments, primarily restaurants and nightlife venues. However, its cash flow deteriorated due to the COVID-19 crisis and the rise of cashless payment services—such as “PayPay”—that do not rely on credit cards.

In 2024, an incident even occurred in which an employee was arrested for signing merchant contracts under someone else’s name for restaurants that would not normally have passed the screening process. As concerns about the company’s creditworthiness came to the surface, it went bankrupt, leaving behind liabilities totaling 115 billion yen.

Currently, merchant partners are facing an emergency situation in which they are not receiving the sales proceeds that Zen Toshin was supposed to advance on their behalf. A man who runs a members-only bar in Minato Ward, Tokyo, describes his plight.

“Our outstanding payments amount to about 900,000 yen. In early July, we received a document from Zento Shin titled ‘Notice Regarding the Filing for Bankruptcy,’ but it did not mention any specific compensation.”

The total amount of unpaid funds since July 1 is estimated to exceed 5 billion yen, but Yutetsu Nakano, a tax accountant and business startup consultant, believes “the likelihood of recovering these funds is virtually zero.”

“Zento Shin’s liabilities exceed 60 billion yen.With such a massive amount of negative equity, the company has virtually no assets left to distribute. Since tax payments and employee salaries take priority over debt collection, even if some assets remain, creditors will likely recover only a few percent of their claims. Furthermore, procedures such as filing a claim form often take nearly a year. Many franchisees will likely have no choice but to give up on recovering their debts.”

The current concern is a domino effect of bankruptcies among franchisees and business partners.

“If franchisees’ cash flow deteriorates, business partners—such as food and equipment suppliers and landlords of store premises—will also be affected. There is a possibility of a chain reaction of bankruptcies,” said Mr. Nakano.

A massive wave of bankruptcies has struck the financial infrastructure that is the lifeline of the restaurant industry. A hellish scene of chaos, engulfing franchisees and business partners alike, is spreading across downtown districts nationwide.

From the July 31, 2026 issue of *FRIDAY*