Common Sense Co., Ltd. (Common Sense), previously known as Arms Co., Ltd. (Arms Corporation), has been declared bankrupt, according to a report by the credit and marketing information firm Tokyo Shoko Research on Tuesday. The company received a special liquidation order from the Tokyo District Court on July 22. Debt accumulated by the company is currently under investigation.

In the fiscal year ending in June 2009, Arms saw a net revenue of 390 million yen (approximately US$3.6 million) with the success of the Ikkitousen franchise; however, sales began to decline soon after. By the fiscal year ending in June 2011, the studio incurred a net loss of 260 million yen (approximately US$2.4 million). Following a shareholder meeting on May 31, the company commenced the special liquidation proceedings. At the time of insolvency, the company held a capital of 3 million yen (approximately US$28,400).

Arms was spun off of Studio Kikan (later Pierrot Plus, now Studio Signpost) as an affiliate in November 1996 with Osamu Shimizu (Tegamibachi animation producer) as its representative. The company was originally established to produce adult animation and handle Studio Pierrot's subcontract productions. Initially working on titles with adult animation labels Pink Pineapple and Green Bunny, the studio used aliases such as Dandelion, Triple X, and Garyuu Studio.

With the poor sales of adult titles and a growing market for television works, Arms produced its first television anime Mezzo DSA in 2004. Featuring character designs and original concept by animator Rinshin (Queen's Blade), the studio released the adult anime Hininden: Gauss in 2005. However, sales no longer grew as they did for original works, which resulted in the abandonment of the title's second installment. Arms ceased to produce adult animation since.

2015 onward, the studio primarily participated in television productions with Genco, including Valkyrie Drive: Mermaid, Queen's Blade: Grimoire, and Ikkitousen: Western Wolves. Arms also actively began accepting subcontract works from other animation studios. The company changed its official name to Common Sense in August 2017, as it began curtailing its business operations.

Arms was best known for Elfen Lied, Genshiken 2, Maoyuu Maou Yuusha (Maoyu: Archenemy & Hero), Hagure Yuusha no Aesthetica (Aesthetica of a Rogue Hero), Gokukoku no Brynhildr (Brynhildr in the Darkness), and Wizard Barristers: Benmashi Cecil (Wizard Barristers).

Source: IT Media, Tokyo Shoko Research