Perhaps the most striking aspect of the main bank system is the role that the main bank plays when client firms encounter financial adversity. In such cases, the actions of the main bank take on their most direct, intense, and arguably important form, going beyond the kinds of arm's-length information-gathering activities normally connoted by the term 'monitoring'. Sometimes the banks launch so-called 'rescue' operations, as in the famous Mazda case, in other cases they put together refinancing packages similar to a workout specialist in the United States, and in some cases they engineer a major restructuring or liquidation, akin to a privatized version of Chapter 11 or Chapter 7 bankruptcy in the United States. On occasion, a major listed firm will file for bankruptcy under the Corporate Reorganization Law (Kaisha koseiho), but usually this follows a period of close involvement by the main bank in its restructuring effort and is triggered by the bank's decision to curtail its activist role and rising financial exposure.
A number of interesting questions can be asked about the main bank's role in the governance of financial distress. Why does the main bank take on the role that it does? Does its behaviour merely reflect its incentives as a creditor and equity holder with a large financial exposure, or does it reflect a form of implicit contract between the bank and the firm—or indirectly, managers and employees who may be locked into long-term relations with the firm—or between the main bank and other lenders to