After operating for over a decade as a shell of its former self, going as far as leveraging fan favorite properties for new business ventures and establishing outposts for seemingly no reason, the legendary animation studio known as Gainax has been declared bankrupt as of May 29, 2024.

What brought down the famed studio responsible for such classics as Nadia: The Secret of Blue Water, Neon Genesis Evangelion, and Gunbuster wasn’t even related to animation production, but it was related to an old debt that was called in by a debt collector thru a lawsuit.

© NHK, NEP

With no way whatsoever to address the immediate debt, let alone the financial mess that the company was left in as a result of its former executives over the past decade, the decision was made last month to start bankruptcy proceedings for the titles and intellectual property held by the company to be assigned properly. CEO Yasuhiro Kamimura also took great care to emphasize that updates will be made in the future regarding the status of works that Gainax managed once bankruptcy proceedings for the company end in the future.

The ventures that led Gainax to its eventual bankruptcy began in 2012, which included  everything from a restaurant, and running its business ventures improperly. The company also established an additional external production company that was to be dedicated to digital production, though nothing substantial came of the venture.

In addition to these activities, multiple regional outposts were established in Gaina/Studio Gaina and Fukushima Gaina, Gainax International, GAINAX Kyoto, Yonago Gainax, Gainax Niigata, and Gainax West. All of these outposts, which are unaffiliated with the current brand managed by Khara, were formed at the same time that the previous business activity was underway and impacted Gainax’s ability to conduct business as an animation studio, greatly contributing to its decline and lack of financial viability. 

Evangelion Rei
©khara/Project Eva.

It was also revealed that former CEO Tomohiro Maki, who had been with the studio in various roles since 1992, before being installed as CEO in 2019, transferred shares to a person “with no knowledge of production” in 2018, with the approval of former management at the time. Maki’s arrest in 2019 following his appointment to CEO also caused the company to come to a standstill in terms of operations, which led to former staff member and co-founder Hideaki Anno to attempt to rescue the company through a series of loans. Maki was arrested for indecent acts against a minor in 2019 and was sentenced in 2020 to two years in prison.

After the loans were delivered, a new group of directors was installed on behalf of main creditor Khara and partner companies including KADOKAWA, King Records Co., Ltd., and Trigger Co., Ltd. that were tasked with figuring out the financial state of the company on behalf of the original investors that produced much of Gainax’s previous output starting in 2020. Anno also took care to become more involved with Gainax’s management at this time in order to ensure long-term stability and improve the financial standing of the company, but his input was frequently ignored by the new management despite providing substantial financial support.

Once the new board was installed, what was discovered was much worse than expected, as both company boards discovered massive financial malfeasance such as large amounts of borrowing from financial institutions without checks and balances, subsequent defaults on debts to companies within the animation industry, unpaid royalties, as well as unauthorized sales and transfers of intellectual property and production materials.

For its part as the main creditor and brand manager, Khara has released its own statement acknowledging that the state of Gainax made it all but impossible to undertake repayment to all of the affected parties after being aware of the company’s dire financial state for quite some time. Khara even considered conducting another round of loans to address the debt situation, only to reconsider. The decision to step back from taking on responsibility for the debts incurred came from the unrealistic expectations and amounts to be repaid, with bankruptcy the only remaining option.

Gainax’s legacy as an animation studio ends not with a massive production taking down the company, or the exodus of talent, but white collar misamanagement. In many ways, it’s the worst way for a company of its stature to end up in, but it’s also reflective of how Gainax’s former executives saw the company, not as a studio dedicated to creating great works, but as a company ripe for picking apart financially, until there was nothing left.