Data processing: financial – business practice – management – or co – Automated electrical financial or business practice or... – Finance
Reexamination Certificate
1999-06-18
2004-11-30
Smith, Jeffrey A. (Department: 3625)
Data processing: financial, business practice, management, or co
Automated electrical financial or business practice or...
Finance
C705S039000
Reexamination Certificate
active
06826545
ABSTRACT:
BACKGROUND OF THE INVENTION
1. Field of the Invention
The present invention relates to a method for settling accounts among a plurality of participants, and more particularly to a method for settling accounts among a plurality of participants by multilaterally or bilaterally setting off sums payable by each participant to others with sums receivable by each participant from others.
2. Description of the Related Art
Along with the diversification of commercial transactions in recent years, there is a growing need for quicker settlement of increasingly complex credits and debits among a plurality of companies.
Supposing that, for instance, relations illustrated in
FIG. 9
exist between A Company
1
and B Company
2
, between A Company
1
and C Company
3
, between C Company
3
and D Company
4
, and between B Company
2
and D Company
4
. Thus, A Company
1
owes ¥1.2 million to C Company
3
, C Company
3
owes ¥300,000 to D Company
4
, and D Company
4
owes ¥1 million to B Company
2
, while B Company
2
owes ¥500,000 D Company
4
and A Company owes ¥100,000 to B Company
2
, each payable by a prescribed day.
Settlement methods applicable to such a situation include one based on multilateral setoffs. A “multilateral setoff” means a procedure of account settlement by which a company whose payables to other companies exceed the receivables from others pays the excess payables to a third party institution and another whose receivables from other companies exceed the payables to others receive from the third party institution the excess receivables. Thus, where the payment relations shown in
FIG. 9
exists, a multilateral setoff arrangement enables the accounts involved to be settled, as illustrated in
FIG. 10
, by having A Company
1
pay ¥1.3 million and D Company
4
pay ¥200,000 to an institution
5
, represented by a circle, and B Company
2
receive ¥600,000 and C company
3
receive ¥900,000 from the institution
9
.
However, this settlement system based on a multilateral setoff arrangement involves the problem that, once any one company goes insolvent, the account settlements of not only the companies directly dealing with the insolvent but also all the other participants in the system, even if they have no direct transactions with the insolvent, are prevented from having their accounts settled in time.
Suppose, for instance, A Company
1
runs into a circumstance under which it cannot pay ¥1.2 million to C Company
3
by the due date. In such a case, if C Company
3
planned to pay ¥300,000 to D Company
4
after receiving the ¥1.2 million from A Company
1
, C Company
3
will become unable to pay the ¥300,000 to D Company
4
. Or if D Company
4
planned to add, after receiving the ¥300,000 from C Company
3
, its own fund of ¥200,000 to the received sum and pay ¥500,000 (the balance between the ¥1 million payable to B Company
2
and the ¥500,000 receivable from the same), D Company
4
will also become unable to pay the ¥500,000 to B Company
2
because C Company
3
has run into a circumstance that it cannot pay the 300,000 to D Company
4
.
To describe this situation with reference to
FIG. 10
, although the sums payable to the institution
5
are ¥100,000 due from A Company
1
and ¥200,000 from D Company
4
, those payable from the institution
5
are ¥600,000 due to B Company
2
and ¥900,000 to C Company
3
, resulting in an imbalance between payables and receivables.
Even if the liability of A Company
1
to pay ¥1.2 million to C Company
3
is excluded from this multilateral setoff and the sums to be settled are recalculated, C Company
3
, which would otherwise receive ¥900,000, will conversely have to pay ¥300,000, and find it very difficult to raise that fund by the due date. This alternative again is unable to solve the problem of disturbing the account settlements among the companies involved.
Moreover, there is another problem that, in spite of the absence of direct transaction between D Company
4
and A Company
1
, the insolvency of A Company
1
drives D Company
4
itself into insolvency. In addition, though the insolvency of D Company
4
is due to the insolvency of C Company
3
, which in turn is a consequence of the insolvency of A Company
1
, making it difficult for D Company
4
to urge C Company
3
to fulfill its obligation. Thus, there is the problem that chain reactions of corporate bankruptcies may arise with the ascription of responsibility remaining ambiguous.
Therefore, to avoid such a situation in a multilateral setoff arrangement and to settle all the accounts on the due date, the prior art offered no other alternative than to allow only reasonably creditworthy companies to participate in the settlement system.
To solve the problem of the ambiguous ascription of responsibility for the blockage of account settlements among all the participating companies by the insolvency of only one of them, a conceivable alternative is a bilateral setoff arrangement under which each participating company settles accounts with only those other participants with whom it has direct transactions. However, where accounts are settled on the basis of bilateral setoffs, the sums set off may become smaller than those set off multilaterally. Where there are accounts to be settled as shown in
FIG. 9
, if for instance C Company
3
is to settle its accounts on the basis of bilateral setoffs, it has to receive ¥1.2 million from A Company
1
and pay ¥300,000 to D Company
4
, but under a multilateral setoff arrangement, it has only to receive ¥900,000 from the institution
5
. In these compared cases, the ¥300,000 set off multilaterally cannot be set off bilaterally, resulting in the problem that settlements by bilateral setoffs are less efficient than settlements by multilateral setoffs.
SUMMARY OF THE INVENTION
An object of the present invention is to provide a method for account settlement among a plurality of companies differing in creditability, by which insolvency of any participating company can be prevented from affecting all the others and the ascription of responsibility among the participating companies can be clearly defined while maintaining the efficiency of settlement based on the results of multilateral setoffs.
According to one aspect of the invention, there is provided a method for settling accounts among a plurality of participants, comprising:
receiving a security from each of the plurality of participants;
determining the sum to be settled by each of the plurality of participants, within the value of the securities received, by multilateral setoffs;
paying the sum due to each participant who has a net receivable sum as a result of the foregoing determination;
determining the sums to be settled by the participant, whose payables to the other participant, if included in multilateral setoffs, would make the total sum to be settled exceed the value of the securities and therefore should not be included therein, by bilateral setoffs; and
paying the settled sums among the participants concerned in accordance with this determination.
According to another aspect of the invention, there is provided a method further comprising:
receiving, in advance of the determination of the sum to be settled by multilateral setoffs, payment information indicating which of the plurality of participants is to pay how much to whom and when;
determining, in response to an inquiry by any of the plurality of participants, the value of the security this particular participant is to furnish on the basis of the payment information; and
notifying the participant of this determined value of security.
According to still another aspect of the invention, there is provided a method wherein:
the payment information is received from a buyer out of the plurality of participants, and processing is done on the basis of the payment information only when the legitimacy of the payment information is confirmed by an electronic notarial institution.
According
Kawashima Seigo
Kuroiwa Hirotaka
Foley & Lardner LLP
Garg Yogesh C
NEC Corporation
Smith Jeffrey A.
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