Turkey has tightened up its postponement of bankruptcy regime.
Bad faith debtors would regularly exploit the prior legislative
arrangements and court processes, using them to threaten or bargain
with their creditors by depriving them of enforcement and execution
avenues for a significant and uncertain amount of time. However,
legislative amendments go a significant way towards evening up the
balance between creditors and debtors in this area. The amendments
entered into force on 9 August 2016, but will not apply until after
the current three month State of Emergency has been lifted.
The Law Regarding Amendment of Certain Laws for Improvement of
Investment Environment numbered 6728 ("Amendment
Law") was published in Official Gazette number 29796
on 9 August 2016.
Changes introduced by the Amendment Law include:
Legislation now specifies the exact
documents and data which companies must submit when applying to
postpone bankruptcy. If the applicant fails to submit the required
information within a two week grace period, the applicant will be
immediately declared bankrupt.
Recovery project reports must now
demonstrate how the management expenses and working capital will be
met during the postponement period.
Creditors now have legislative basis
for objecting to bankruptcy postponement, within two weeks of its
announcement in commercial registry. Creditors can object (request
the court reject the postponement application) on the ground that
the applicant does not meet the criteria for postponement of
Applicants can now only submit a
revised recovery project only once during postponement of
Extensions to the postponement period
are reduced from four years to one year.
Applicants which have already
benefited from postponement of bankruptcy cannot apply for a
further postponement within one year of previous postponement
periods expiring (including extension periods).
The court can now appoint multiple
trustees if it believe a single trustee will not be capable of
handling all necessary duties.
A single trustee can now be appointed
to a maximum of three companies.
Courts can now terminate a trustee
and appoint new trustees, if necessary.
Trustees must now submit a quarterly
evaluation report to the court about whether the applicant shows
improvements in line with the recovery project.
Please see this link for full text of the Amendment Law
(only available in Turkish).
Information first published in the MA | Gazette, a fortnightly legal
update newsletter produced by Moroğlu Arseven.
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guide to the subject matter. Specialist advice should be sought
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