Introduction

In Turkey, Concordat (Konkordato) provides financially distressed companies an opportunity to restructure their debts and avoid bankruptcy. Governed by the Turkish Execution and Bankruptcy Law (Law No. 2004), Concordat allows debtors to negotiate new payment terms with their creditors under court supervision. This article explains the concordat process, creditor rights, and recent legal updates in 2024.

Application and Respite Period:

• The Concordat process begins with the debtor submitting a restructuring plan to the commercial court.
• Once the application is made, the court may grant a temporary respite period (geçici mühlet), typically lasting three months. During this time, creditors are barred from initiating or continuing enforcement actions against the debtor’s assets.
• A Concordat Commissioner is appointed to supervise the debtor’s activities and evaluate the feasibility of the restructuring plan.

Definitive Respite Period:

• After the temporary respite, the court may extend this period to a definitive respite (kesin mühlet) if the commissioner’s report supports the debtor’s restructuring proposal.
• This period can last for up to one year, with a possible extension of an additional six months. During this time, the debtor must follow the restructuring plan while under court supervision.

Creditor Voting and Approval:

• The restructuring plan must be presented to creditors for approval. A majority of creditors, representing at least two-thirds of the debt, must agree to the plan.

1. If the plan is accepted, it becomes binding on all creditors, including those who opposed it.

Right to Challenge the Plan:

• Creditors have the right to challenge the debtor’s restructuring plan if they believe it is unfair or unrealistic.
• They can also file objections if they suspect fraudulent activities or deliberate asset concealment by the debtor.

Secured Creditors:

• Secured creditors (those holding collateral) retain priority in any repayment plan. If the debtor’s assets are insufficient to cover all debts, secured creditors are paid first from the proceeds of the collateral.

Voting Rights:

• All creditors are entitled to vote on the restructuring plan. However, if creditors do not reach the required majority, the court can impose a forced settlement in certain circumstances.