TOKYO (TR) – A massive bankruptcy by a scandal-plagued credit card payment proxy company has sent shockwaves through Japan’s entertainment districts, leaving thousands of bar owners and hostesses facing financial ruin.
Zentoshin, a company that advanced credit card sales to merchants before receiving the funds from card companies, filed for quasi-bankruptcy on July 6. The collapse left behind a staggering 115 billion yen in debt, directly impacting over 200,000 clients, primarily restaurants and nightlife establishments, reports weekly tabloid Friday (July 31).
“Unpaid sales over 1 million yen”
The company’s financial struggles were reportedly exacerbated by the COVID-19 pandemic and the rise of QR-code payment apps like PayPay. However, Zentoshin was already steeped in controversy.
Earlier in 2024, an employee was arrested for using false identities to secure merchant contracts for nightlife venues that could not pass standard financial screenings, bringing the company’s shady business practices to light.
Now, the sudden collapse has triggered a state of emergency in neon-lit districts across the country, as establishments realize their recent sales have vanished into thin air.
“My unpaid sales from mid-June amount to over 1 million yen,” a female “snack” bar owner in Tokyo said. “I have no prospects of receiving the money that was supposed to be transferred on July 15. At this rate, I can’t pay my rent or the wages of the girls working here.”
“No assets left”
A male owner of a members-only bar in Minato Ward echoed the despair. “We are owed about 900,000 yen. I received a bankruptcy notice from Zentoshin in early July, but it contained absolutely no details about compensation.”
Total unpaid funds to merchants since July 1 are estimated to exceed 5 billion yen. According to Hiroaki Nakano, a tax accountant and business consultant, the chances of bar owners seeing a single yen of their money are “close to zero.”
“Zentoshin’s negative net worth exceeds 60 billion yen. There are virtually no assets left to distribute,” Nakano explained. “Taxes and employee wages take priority in debt collection. Even if some money remains, merchants might only recover a few percent of what they are owed after a year of paperwork. Most will simply have to give up.”
Experts are now warning of a looming wave of chain bankruptcies. As cash-strapped bars and restaurants fail to pay their bills, the financial devastation is expected to spread to food suppliers, liquor vendors, and property landlords, turning the nation’s nightlife districts into a financial living hell.
