On July 6, ZENTOSHIN, a company that had provided credit card payment advance services primarily to small businesses in the food and beverage industry, filed for bankruptcy with the Osaka District Court and was placed under bankruptcy proceedings. The company had total liabilities of JPY 125.9 billion. Its financial condition had deteriorated due to poor business performance during the COVID-19 pandemic, when fee income from restaurants sharply declined. In addition, its management foundation had already been undermined after it was referred to prosecutors for fraudulently registering merchants that did not meet credit card companies' screening standards.

The company's service shortened the time lag between credit card transactions and the receipt of funds, helping restaurants manage their cash flow, as they typically have to pay suppliers before receiving sales revenue. More than 200,000 merchants (Note 1) are now facing a double challenge: the risk of not receiving sales proceeds owed to them and the loss of business opportunities resulting from the suspension of credit card payment services. According to Tokyo Shoko Research, one of Japan's leading corporate credit research firms, "the number of restaurant bankruptcies in the first half of 2026 reached a record high." ZENTOSHIN's collapse may further worsen this trend.

What was even more surprising was the revelation that the company had allegedly been engaging in accounting fraud for more than 20 years, beginning well before the COVID-19 pandemic. The reported misconduct included recording fictitious receivables, overstating cash deposits, and understating liabilities by omitting outstanding payment obligations to merchants. As a result, the company had reportedly remained in a state of de facto balance-sheet insolvency for many years. Since the company also played an indirect role in supporting small restaurants and other local businesses, many regional financial institutions had extended loans to it. Those lenders are now moving simultaneously to recognize loan-loss provisions, and the impact of what is being described as "Japan's largest corporate bankruptcy of the year" is spreading across many sectors.

Accounting fraud continues to emerge across a wide range of companies, from startups to major listed corporations, including alt Inc., NIDEC CORPORATION, AIR WATER INC., and companies within the KDDI Group. In response to these cases, on June 22 the Japanese Institute of Certified Public Accountants (JICPA) recommended introducing a management certification system modeled on the U.S. Sarbanes-Oxley Act (SOX). Under the U.S. system, senior management must certify that securities filings are fairly presented and free of material misstatements, and false certifications may result in criminal penalties. Whether a company is listed or privately held, falsifying financial results is a betrayal not only of shareholders, but also of business partners, customers, employees, and society as a whole. Corporate executives should conduct themselves in a manner that leaves no room for criticism from the Japanese Institute of Certified Public Accountants (JICPA) that "management discipline must be strengthened."

Note 1: According to ZENTOSHIN's website, the company reported having more than 200,000 merchants in 2018. Its current number of merchants is unknown.

Takashi Mizukoshi, the President
This Week’s Focus, July 5 – July 9, 2026