Turkey: Postponement Of Bankruptcy In Turkish Capital Stock Companies

Last Updated: 14 March 2009
Article by Ali Kosklu

In September 2008, it was announced that Lehman Brothers Investment Bank was filing for bankruptcy after the Federal Reserve Bank turned down its request to provide financial support to the once giant financial institution. Following Lehman Brother's filing and the downfall of other major financial institutions, the ramifications of the US subprime mortgage crisis has rapidly become a global crisis and has transformed into what has now become a worldwide financial catastrophe.

The crisis has had devastating effects in virtually every country, rich or poor, marked by the contraction of the global economy. Needless to say, companies across all industries will inevitably suffer from this economic downturn in one way or another. Companies that were once successful and stable are filing for bankruptcy or being liquidated. In Turkey, the first wave of the crisis was felt in October 2008 where it affected small to mid-sized companies. Consequently, the number of companies facing financial difficulty and bankruptcy has risen dramatically.

This article seeks to provide an outline of Turkish Law as regards the rules for postponement of bankruptcy and bankruptcy implications for capital stock companies and their creditors.

General Aspects of Bankruptcy

Bankruptcy proceedings are performed by execution offices and the decision with regard to the bankruptcy of the debtor is rendered by the commercial courts.

There are three different types of bankruptcy stipulated under the Execution and Bankruptcy Law No. 2004 ("EBL"), which are; (i) ordinary bankruptcy, (ii) bankruptcy pertaining to negotiable instruments and (iii) direct bankruptcy.

Ordinary bankruptcy and bankruptcy pertaining to negotiable instruments are similar to each other in terms of how the proceeding is initiated. Direct bankruptcy, however, is handled differently. If one of the conditions stipulated under the EBL exists, the creditor may request for the bankruptcy of the debtor by applying directly to the commercial courts. The purpose of direct bankruptcy is to eliminate the risks which may arise during the initiation of the bankruptcy procedure against the debtor and the delivery of the bankruptcy payment order from the creditor of its receivables to the debtor.

A. Direct Bankruptcy

Under the EBL, direct bankruptcy may be filed only in connection with certain company types and under specific circumstances outlined in the legislation. With respect to capital stock companies (joint stock companies and limited liability companies) and cooperatives, direct bankruptcy may be filed for when a company's liabilities are greater than its assets. Information on the company's capital structure and debt obligations is provided in an interim balance sheet.

B. Filing for Bankruptcy

Once a company recognizes a situation where its liabilities exceed its assets, the company is obliged to immediately notify the competent commercial court and submit a balance sheet. If the court determines that the liabilities of the company is impaired and if there is no request for the postponement of bankruptcy in accordance with the below mentioned procedure, the court shall immediately deem the company bankrupt. Bener Law Office 2/2 Postponement of Bankruptcy in Turkish Capital Stock Companies

C. Postponement of Bankruptcy

1. Request for Postponement:

The representatives of the company or any of its creditors may request postponement of bankruptcy, i.e. where bankruptcy is deferred until a more in-depth review of the actual financial situation is conducted. Postponement of bankruptcy will only be considered when the company submits to the court a proposal to restructure its financing, primarily to the benefit of its creditors. Should the court consider the restructuring plan viable, it may grant to the company the postponement of bankruptcy for a period of one year. The postponement period may be extended subject to the determination of the courts but shall not exceed four years.

2. Measures Taken by the Court

The court that rendered the decision to postpone bankruptcy may take all necessary measures to protect the assets of the company and may appoint a trustee upon making its decision. The court may either remove all authority vested in the company's management and assign it to the trustee, or enable the trustee to approve the decisions and transactions of the management.

3. The Implications of Postponement

Some restrictions are imposed on creditors enforcing their rights over companies under postponement of bankruptcy. For example, during the postponement period, no proceedings may be filed against the company and any proceedings previously initiated are suspended. Prescription periods and statute of limitations deadlines shall be suspended until the debtor is no longer under postponement of bankruptcy. It is important to note that foreclosure proceedings, mortgage claims and commercial pledges may be initiated or continued during such postponement period. Although such proceedings may be in effect, it is important to highlight the fact during the postponement period repossession measures may not be taken by creditors and the sale of pledged property may not be performed.

4. Post Postponement of Bankruptcy

During the initial one year postponement period, the company is deemed to be an on-going concern. In the course of this period, if the company is successful in reorganizing its financial position and is no longer impaired, the court absolves the postponement of bankruptcy over the company and the company is able to reemerge to continue with business as normal.

However, if before the expiration of the postponement period, the court decides that the company continues to be impaired, the court shall rescind the postponement of bankruptcy over the company and officially declare it bankrupt.

Considering the current economic environment, it is highly likely that there will be an increase in the number of companies filing for bankruptcy in Turkey. Thus, it is highly important that companies in Turkey and foreign investors alike be abreast with the rules and regulations regarding the issues surrounding bankruptcy.

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.