Turkey: Direct Bankruptcy For Collection Of Receivables Under Turkish Law


Bankruptcy cases may be filed by the creditors following an enforcement proceeding against the debtor, without any need for a prior enforcement proceeding, in the presence of certain grounds. The grounds for the initiation of a direct bankruptcy cases are, in general, set out under Articles 177 and 178 of the Enforcement and Bankruptcy Law ("EBL"). In addition to these Articles, there are various provisions in other legislation that permit the creditor to file a direct bankruptcy case against the debtor.

Grounds for Direct Bankruptcy Case

Article 177/1 of the EBL provides four grounds for filing a direct bankruptcy case against a debtor. The first ground is when the residence of the debtor cannot be determined. The notion of "residence" is interpreted wider than its meaning in civil law, and therefore, it comprises the domicile of the debtor. As a result, in the event where the debtor has a de facto, or temporary, domicile, the condition shall not be fulfilled. In addition, in the event where the debtor has a domicile abroad, the condition shall not be deemed fulfilled, as the provision does not make any distinction between a domicile within the country, or abroad. The presumptive evidence for these conditions is sufficient. This ground is only applicable for real persons, since the residence of the legal persons are stated in their articles of association and are, therefore, determinate.

Another ground is established when the creditor may file a direct bankruptcy case if the debtor has fled for purposes of avoiding creditors[1]. This means the debtor has left his/her residence in order to avoid his/her due or undue obligations, thereby damaging his/her creditors. In some cases, the new address of the debtor may be known, but it may be inconvenient for the debtor to initiate an enforcement proceeding. In such cases, certain scholars state that presumptive evidences would be sufficient to prove the intention of the creditor. However, some others defend that the burden of proof is on the debtor; thus, the creditor shall prove the change of residence of the debtor, and the debtor shall prove that the purpose of this change was not to avoid his/her debts, and not to damage his/her creditors[2].

Another ground for a direct bankruptcy case is the occurrence or attempt by the debtor of fraudulent transactions which threaten the rights of the creditors. This act does not have to qualify as a crime in terms of criminal law, nor does the debtor have to be subject to any criminal investigation. Occurrence or attempting to conduct fraudulent transactions that have a direct or indirect negative effects on the assets of the debtor is deemed to be sufficient. The creditor may initiate a direct bankruptcy in the presence of the cases set forth under Articles 278-280 of the EBL regarding the initiation of a lawsuit on the annulment of a disposal transaction[3]. Similarly, the grounds of fraudulent bankruptcy set forth under Article 311 of the EBL may also be evaluated as grounds for a direct bankruptcy case[4].

The last of the ground provided by Article 177/1 of the EBL is hiding the assets by the debtor during an attachment proceeding. This ground is only applicable once the obligation to declare its assets arises for the debtor[5]. After the enforcement proceeding for purposes of attachment becomes definite, this condition is deemed fulfilled in the event the debtor avoids to declare its assets, or does not declare its assets in their entirety, and the declared assets do not cover the total amount of the receivable, interest, and expenses. If the declared assets cover the total amount of the receivable, interests and enforcement expenses, this condition is not fulfilled even if the debtor did not declare its assets in their entirety.

Pursuant to Article 177/2 of the EBL, suspension of the payments is another ground for a direct bankruptcy case. Suspension of the payments means the permanent and general non-payment of the debts by the debtor. Although it is similar to insolvency, suspension of payment is different than insolvency; in the case of suspension of the payments, the debtor does not have enough cash to pay its debts, regardless of its assets. The debtor may explicitly declare that it has suspended its payments. Additionally, there are several indicators of suspension of payments, such as existence of numerous pending enforcement proceedings against the debtor and non-payment of due debts. However, if the debtor requests arrangement of debts with the creditors does not mean that the debtor has suspended its payments. Accordingly, if the enforcement court grants an arrangement period to the debtor, the enforcement proceedings shall be suspended during this period, but such suspension shall not be deemed as "suspension of payments" in terms of a direct bankruptcy case. The Court of Cassation also considers the suspension of payments as a reason for the direct bankruptcy case[6]: "In accordance with the documents in the file, the evidences that the decision is based on and in particular art. 177/2 of the EBL, it is concluded that the suspension of the payments is a reason for direct bankruptcy case; that the debtor, as the defendant, did not make any payments as it is understood from the enforcement files; that the trustee appointed to the company has declared before the court that they will make the payment, and that the suspension of payments has been determined by the expert report; thus, it is decided that (...) the decision that is in compliance with the procedure and law is APPROVED."

In accordance with Article 177/3 of the EBL, refusal of the offered arrangement with creditors, removal of the arrangement period and dissolution of the arrangement are grounds for the direct bankruptcy; however, refusal of its request for arrangement period would not constitute a ground for direct bankruptcy as per art. 177/3 and 301 of the EBL[7]. Nevertheless, the refusal of request for arrangement period by the enforcement court might be interpreted that the debtor has suspended its payments. In addition, in the case of restructuring by way of reconciliation, the courts declare the bankruptcy of the debtor if the debtor does not comply with its obligations arising from the project or the rights of the financing creditor is not satisfied[8].

The last ground provided by Article 177 of the EBL is non-payment of a debt approved by a court decision although it has been requested by a statutory demand, and which is also accepted by the Court of Cassation's decisions[9]: "According to the fact that (...) the statutory demand is notified, that it is adequate to accept that bankruptcy request and court decision was due pursuant to art. 166 of the EBL; and that no additional payment order was required as Art. 177/4 of the EBL provides grounds for direct bankruptcy case (...)." The prior court decision does not have to become definitive in order to initiate the direct bankruptcy case. However, in practice, the courts suspend the direct bankruptcy case until the decision of the Court of Cassation is granted if the debtor obtains a decision for suspension of execution proceedings[10]. It is controversial among the scholars whether a direct bankruptcy case may be initiated if the enforcement proceeding is based on a document that substitutes a court decision, and the Court of Cassation has rendered different decisions with this regard[11].

In addition to the above, various other grounds for direct bankruptcy are provided regarding the general partnership and limited partnership (société en commandite) companies, as well as the share capital companies. Pursuant to Article 238/2 of the Turkish Commercial Code, a creditor may initiate a direct bankruptcy case against a general partnership and its partners if the creditor has initiated an enforcement proceeding with a prior court decision, and the debtor has not repaid the debt despite the payment order. This provision applies for the shareholders of imited partnerships, as well. For the share capital companies, over-indebtedness constitutes a reason for a direct bankruptcy case. The state of over-indebtedness is determined by the experts appointed by the court.


In the presence of the above-stated grounds, the creditors may file a direct bankruptcy case before the commercial court of first instance where the debtor is situated, without any need to conduct a prior enforcement proceeding for the purposes of bankruptcy.

The bankruptcy case is subject to a simple procedure and fixed fee regardless of the amount of the receivable since the subject of the case is the bankruptcy of the debtor and not the payment of the debt. Nonetheless, the creditor shall pay advance costs to be determined by the court. The court will spend the advance for the liquidation transactions during and after the bankruptcy case.

The claimant shall specify the ground for the direct bankruptcy in its petition. As the grounds for direct bankruptcy are different from each other, amendment of this ground shall be subject to the prohibition of extension of the claims[12]. Claimant shall prove its receivable and ground for the direct bankruptcy. However, in some cases, definitive evidence is not required and presumptive evidence is deemed sufficient; any type of proof may be submitted to the court.

After receiving the petition, the commercial court announces the bankruptcy request in the trade registry gazette and in daily newspapers. In accordance with Article 178/2 of the EBL, other creditors may demand the refusal of the request before the court within fifteen days as of the date of announcement by claiming that the debtor has arranged the bankruptcy in order to postpone the enforcement proceedings due against him and the payment of its debts. The court will examine whether bankruptcy is appropriate; if there is a need for a further examination, it will examine the merits of the case. Otherwise, the request will be rejected at the very beginning of the case.

With respect to the provisions applicable to the direct bankruptcy case upon the request of the creditor, Article 181 of the EBL makes reference to the provisions on the general bankruptcy procedures. However, the provisions on the last order for payment shall not apply, and the court declares the bankruptcy once the presence of the receivables and the ground for direct bankruptcy is proven.


The creditors are entitled to file an enforcement proceeding for the purposes of bankruptcy in order to request the bankruptcy of the debtor, as well as to file a direct bankruptcy case where the legislator considers that the creditor is under the risk of non-fulfillment, or that the debtor's financial situation is fragile. In this respect, the EBL provides certain general grounds for the direct bankruptcy case, and the Turkish Commercial Code specifies certain grounds for the partnerships. In the presence of these grounds, the creditor may file a lawsuit before the commercial court and prove its receivable and the ground allowing the initiation of the direct bankruptcy case.


[1] Court of Cassation 23rd Civil Chamber, Date 31.05.2012, No E. 2012/1431, K. 2012/3846 (www.kazanci.com).

[2] Sümer Altay, Türk İflas Hukuku, Book I, Ocak 2004, p. 468.

[3] Baki Kuru/Ramazan Arslan/ Ejder Yılmaz, İcra ve İflas Hukuku Ders Kitabı, Ankara 2012, 2nd Edition, p. 493.

[4] Altay, s. 469.

[5] Hakan Pekcanıtez/ Oğuz Atalay/Meral Sungurtekin Özkan/Muhammet Özekes, İcra ve İflas Hukuku, Ankara 2013, 11th Edition, p. 649.

[6] Court of Cassation 19th Civil Chamber, Date 11.03.2004, No E. 2003/7969, K. 2004/2562 (www.kazanci.com).

[7] Court of Cassation 19th Civil Chamber, Date 24.04.2003, No E. 2002/10298, K. 2003/4431 (www.kazanci.com).

[8] Kuru/Arslan/Yılmaz, p. 495.

[9] Court of Cassation 19th Civil Chamber, Date 03.03.2005, No E. 2004/12356, K. 2005/2159 (www.kazanci.com)

[10] Altay, p. 473.

[11] Altay, p. 474.

[12] Pekcanıtez/Atalay/ Özkan/ Özekes, p. 654.

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.

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.