Turkey: Execution And Bankruptcy Proceedings In Turkey

Creditors may collect their receivables from debtors, who have not paid their debts, through enforcement proceedings. There are two main enforcement methods in Turkey: (i) execution proceedings and (ii) bankruptcy proceedings. In this article, we will provide a general overview of these enforcement methods.


There are three types of execution proceedings in Turkey for collection of debts: (i) Proceedings without judgment; (ii) proceedings with judgment; and (iii) foreclosure proceedings. These proceedings are governed by the Enforcement and Bankruptcy Law (the "EBL"). All execution proceedings are carried out by execution offices.

1. Proceeding Without Judgement

A proceeding without judgment can be (i) an ordinary execution proceeding; (ii) an execution proceeding involving a receivable based on negotiable instruments such as promissory notes, bills of exchange and cheques; or (iii) an execution proceeding for lease receivables.

Creditors can initiate execution proceedings, by submitting an execution request (a standard form) to the competent execution office. Within three days following the submission of the execution request, the execution office must issue a "payment order" and serve it on the debtor's place of business or residence. Upon receipt of the payment order, the debtor must act in one of the following three ways, within seven days1 upon receipt of the payment order: (i) paying the amount requested in the payment order; (ii) objecting to the payment order; (iii) declaring his property.

If the debtor does not object to the payment order, then he must pay the amount requested in the payment order or declare his property (to show that he is not able to pay) within seven days2 following the payment order's service. On the other hand, if the debtor objects to the payment order, the execution proceeding will be suspended automatically and it may not proceed until the objection is dismissed.3 In order to dismiss the objection, the creditor may either file a "lifting of objection lawsuit" before execution courts within six months or a "cancellation of objection lawsuit" before civil courts, within one year following the debtor's objection.

If the debtor has drawn up one of the documents listed under Article 68A of the EBL (e.g. a promissory note, documents issued by or before governmental authorities) or has acknowledged his debt through a notary public, the creditor can file a lawsuit in order to lift the objection before the execution courts. If the creditor cannot prove the existence of the debt pursuant to Article 68A, he must file a cancellation of objection lawsuit before the civil or commercial courts. Lifting of objection is generally decided by the court in a short time, whereas cancellation lawsuits can take one or two years.

If the court (either civil/commercial or the execution) finds that the debt does not exist and also finds that the claimant (i.e. the creditor) was unjustified in commencing execution proceedings, the claimant will be ordered to pay at least 20% of the claimed amount to the defendant (i.e. debtor) as compensation. If the court resolves in favor of the claimant (i.e. the creditor) and cancels or lifts the defendant's objection, the court will order the defendant to pay compensation not less than 20% of the claimed amount. The rationale behind this compensation is to deter claimants from filing execution proceedings in the absence of a receivable, and debtors from filing objections when they are in debt of the claimed amount.

If the court cancels or lifts the objection at the end of the lawsuit, the execution proceeding that had been suspended by the objection will resume, even if the court's decision is appealed by the debtor. Within three days following the service of the court's decision, the debtor must declare his properties. In the event the debtor does not declare his property, he may be sentenced to imprisonment.

The payment order becomes final and binding if: (i) the debtor does not object to the payment order within seven days; (ii) the debtor does not pay the debt within seven days; (iii) the court cancels or lifts the debtor's objection or (iv) the court resolves in favour of the claimant. At this time, the creditor becomes entitled to request attachment of the debtor's assets.

Following their valuation, the attached assets will be sold through public auction upon the creditor's request. In the first public auction, the attached assets can be sold for at least 50% of their value. If, at the end of the first auction, the assets could not be sold, the execution office will arrange a second public auction with the same threshold. If, following the sale, the liquidated assets are not sufficient to cover the creditor's claim, the execution office will prepare a ranking scheme. The creditors' receivables are ranked according to attachment date. If assets belonging to the debtor are found after the ranking scheme is prepared, the creditors in the first rank must be satisfied before the others.

2. Proceeding With Judgement

Proceedings with judgment and proceedings without judgment are very similar. The most important difference is that in proceedings with judgment, there must be a prior court decision to start the execution proceedings. In addition, the debtor may object to the payment order within seven days following its service, based on the statute of limitation (the time limit expires after ten years following the final judgment), finalization or suspension. Unlike proceedings without judgment, when the debtor objects to the payment order in due time, the execution proceeding is not automatically suspended. To suspend the execution proceeding, the debtor must submit a letter of guarantee issued by a bank or other security agreed to by the creditor. All other procedures are the same for both types of proceedings.

3. Foreclosure Proceedings

Foreclosure proceedings are also very similar to proceedings without judgment. There are very few differences, however, which are worth noting. A foreclosure proceeding may be a proceeding with or without judgment. Under the EBL, if a debt has been secured by a pledge (e.g. a vehicle pledge), the creditor must particularly request the foreclosure of the pledges, rather than commencing other proceedings.

The debtor may object to the payment order within seven days following its receipt. If the debtor does not object to the payment order, then he must pay the amount requested under the payment order and declare his properties within 15 days following its receipt. If, at the end of the sale, the proceeds are not sufficient to cover the creditor's claim, the execution office will issue a "deficiency document". With this document, the creditor would be entitled to commence a standard execution proceeding to which the debtor cannot object.


Another method of collecting monetary debts is commencing bankruptcy proceedings against the debtor. Creditors may prefer commencing bankruptcy proceedings over commencing execution proceedings; as, in bankruptcy, all debts, including the ones that will become due in the future, will become due and all of the debtors' assets will become subject to liquidation for the purpose of satisfying the creditor's receivables. However, as bankruptcy lawsuits generally take more than a year due to the workload of the commercial courts in Turkey, some creditors avoid requesting the debtor's bankruptcy.

Bankruptcy proceedings can only be commenced against merchants. In the presence of a monetary debt, creditors of merchants may either commence execution or bankruptcy proceedings, before execution offices. Creditors may also directly request a debtor's bankruptcy from the competent commercial courts, if: (i) the debtor does not have a permanent address; (ii) the debtor is hiding in order to not pay his debts; (iii) the debtor is involved in or attempts to be involved in fraudulent practices that infringe the creditors' rights; (iv) the debtor hides his assets during execution proceedings; (v) the creditors are explicitly or implicitly informed by the debtor that the due receivables may never be paid; (vi) the proposed concordatum (konkordato) is not granted, or the concordatum period is cancelled or terminated; (vii) the debt could not be paid through execution of a court verdict; (viii) indebtedness of capital companies; (ix) termination of restructuring through conciliation or breach of its project.

If a creditor wishes to pursue non-direct bankruptcy proceedings against a debtor, the first step involves requesting payment of the debt through the competent execution office. The execution office will then serve a bankruptcy payment order to the debtor. If the debtor does not pay or objects to this payment order within seven days4 following its service, the creditor may file a bankruptcy lawsuit before the commercial court, within the execution office's judicial circuit within one year following the service of the bankruptcy payment order.

If the debtor objects to the bankruptcy payment order, the bankruptcy proceedings will be suspended. In such case, the creditor will be required to file a bankruptcy lawsuit before the commercial court within one year following the service of the bankruptcy payment order. Before examining merits of the bankruptcy request, the court initially examines merits of the objection. If the court decides on its cancellation, the bankruptcy proceeding against the debtor becomes definite and the court starts examining the bankruptcy request.

The creditor may withdraw the bankruptcy request during the course of the bankruptcy lawsuit, provided that the debtor's approval is obtained. The bankruptcy decision suspends all execution proceedings commenced against the debtor and, thus, the debtor may want to proceed with the bankruptcy lawsuit. In this case, the creditor may re-file the bankruptcy lawsuit, within one month following the withdrawal.

Commercial courts are entitled to grant measures of protection upon the creditor's request. If the debtor has not objected to the bankruptcy payment order, the commercial court will be required to grant interim measures of protection. These interim measures include, but are not limited to, preparing an inventory of the assets, appointing a trustee, etc.

Within 15 days following the announcement of the court's declaration of bankruptcy in the Trade Registry Gazette, other creditors of the debtor may object to the debtor's bankruptcy. If these objections are found reasonable, the commercial court will grant a depository injunction and order the debtor to make payment (or deposit) of the debts, along with interest and expenses, within seven days following such order. The commercial court will then notify the defendant (debtor) that the court will grant the bankruptcy decision, if such payment is not made. If, within this seven day period, the debt is paid or deposited to the court, the court will reject the bankruptcy request. Otherwise, the court will grant the bankruptcy decision at the first hearing following the order.

Once the decision of bankruptcy is granted by the commercial court, the decision is conveyed to the competent bankruptcy office. The bankruptcy offices are the administrative authorities responsible for carrying out bankruptcy proceedings. The bankruptcy office announces the bankruptcy to creditors and third parties and also notifies related persons and entities (i.e. creditors that previously commenced execution proceedings against the debtor, trade registries, professional organizations, etc.) of the debtor's bankruptcy.

The bankruptcy office's main functions are as follows:

  1. supervising the bankruptcy administration's activities;
  2. executing interim measures of protection;
  3. keeping the books of the bankrupt person's or entity's assets;
  4. inviting creditors to the "creditors' first meeting"; and carrying out the liquidation process if the first creditors meeting cannot be convened.

All debts of the debtor become due from the moment the bankruptcy decision is rendered by the commercial court. All creditors can benefit from the bankruptcy proceedings (i.e. they can collect their receivables through the same bankruptcy proceeding). If the debtor is a legal entity, once the bankruptcy decision is rendered, the only purpose of the bankrupt entity becomes concluding the liquidation for the purpose of generating proceeds in order to pay the debts. Moreover, the authorities of the bankrupt legal entity's organs are limited to the purpose of liquidation (e.g. proposal of composition of debts) and they are not authorized to dispose the assets, which are considered the "bankruptcy estate".

The "bankruptcy administration" is comprised of three members appointed by the execution court among six nominees nominated at the creditors' first meeting. The bankruptcy administration conducts the liquidation process and takes care of and liquidates the bankruptcy estate. Subsequent to the bankruptcy administration's examination of the receivables claimed by all creditors of the bankrupt person or legal entity that have duly registered their claims with the bankruptcy estate, the bankruptcy administration will finalize the list of debts and creditors. This list consists of claims of debts, including disputed claims, as well as the bankrupt person's or legal entity's receivables from the third parties. Furthermore, in this list of debts and creditors, the state authorities (e.g. tax offices, the Social Security Institution) that claim public receivables are ranked on top of the list of creditors and pledgee creditors will have a priority over the value of pledged assets.

After the finalization of this list (namely, the ranking scheme), the assets contained in the bankruptcy estate will be sold through a public auction. A certain threshold is set forth under the EBL that must be reached at the public auction for the sale of an asset. This threshold is 50% of the estimated value of the assets. If the threshold determined for the first public auction is not reached, the public auction will be adjourned and a second public auction will take place with the same threshold. As an alternative to the public auction method, the creditors may also decide to sell a portion of the bankruptcy estates through negotiations with buyers. In that case, the bankruptcy administration would ask to the creditors if any of them intends to purchase a particular estate and then decide to sell through negotiations.

During the distribution of the proceeds certain receivables have priority over other claims registered on the list. These are based on employment or family relations or defined as "privileged debts" in specific laws. After these claims are satisfied from the proceeds of the sale of the bankruptcy estate, the remaining amount will be distributed to the creditors. If the remaining amount is not sufficient to satisfy the total amount of other debts, the remaining amount will be distributed to all other creditors in proportion to their receivables.

Finally, a commercial court may also rule for the postponement of bankruptcy, such as in bankruptcy proceedings of capital corporations. In this case, the company's board of directors' (the "BoD", for joint-stock corporations) or board of managers' (the "BoM", for limited liability partnerships) or any of its creditor's will file the request to postpone bankruptcy. This request must be made along with a reasonable "improvement project" to the commercial court. The period of postponement is a maximum of one year. However, this period may be extended annually by the commercial court up to five years.

In these circumstances, the commercial court will appoint a trustee while granting a decision on the postponement of bankruptcy. This trustee must prepare an inventory of the assets and liabilities and is entrusted with the authority of the BoD or BoM. As an alternative, the BoD or BoM may continue to be active and the commercial court will appoint a trustee with the authority to consider and approve the BoD or BoM resolutions. During this process, the commercial court will also take necessary measures for the protection of the capital corporation's assets, and the trustee must regularly submit activity and financial reports. If at the end of the postponement period, the commercial court decides that the capital corporation cannot improve, it will declare the capital corporation's bankruptcy. The commercial court may also declare bankruptcy before the postponement period is completed if the trustee's reports are sufficient and convincing that improvement is not possible.


1 This time limit is five days in execution proceedings involving negotiable instruments.

2 This time limit is ten days in bankruptcy proceedings involving negotiable instruments.

3 Contrary to the ordinary type of execution proceedings, if the monetary claim is based on a negotiable instrument, execution proceedings will not be suspended automatically by the debtor's objection. This is generally considered as an advantage of issuing negotiable instruments.

4 The objection period is five days if the debt is based on a negotiable instrument.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Pinar Bülent
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.