Following the introduction of the provision concerning the concordat procedure under Enforcement and Bankruptcy Law No. 2004 ("EBL"), due to difficulties confronted by the financial institutions in relation to collection of their receivables and to economic conditions, restructuring of various facilities has become prevalent. In order to eliminate the concerns that have arisen in the financial sector during the course of the restructuring of facilities, especially those having a higher volume, and similar to the regulations introduced in 2002 and in 2007 with respect to the restructuring of the debts owed to the financial sector, approximately six months later than the regulations introduced in the EBL, the Regulation on the Restructuring of Debts to the Financial Sector ("Restructuring Regulation" or "Regulation") has come into force through its publication in the Official Gazette dated 15.08.2018 and numbered 30510.

Six months after the entry into force of the said Restructuring Regulation, it has been amended through the Regulation on the Amendment to the Regulation for the Restructuring of Debts Owed to the Financial Sector entered into force through publication in the Official Gazette dated 21.11.2018 and numbered 30602. Thereafter, the Regulation has been re-amended through the Regulation on the Amendment to the Regulation for the Restructuring of Debts Owed to the Financial Sector entered into force through publication in the Official Gazette dated 21.09.2018 and numbered 30886 (bis), and the majority of the provisions have been modified.

The concerns of the financial institutions with respect to the restructuring processes, especially for those facilities having a higher volume and containing a waiver of a certain amount of their receivables, had been due to the lack of legal grounds under Banking Law No. 5411 ("Banking Law") for the restructuring procedures. Ultimately, through Provisional Article 32 introduced to the Banking Law through Article 17 of Law No. 7186, published in the Official Gazette dated 19.07.2019 and numbered 30836 (bis), explicit and statutory grounds have been granted to the said regulations on restructuring.

In this study, the main regulations foreseen under the Banking Law and Regulation in respect of restructuring will be evaluated.

Scope of the Regulations on Restructuring

Determination of the scope of restructuring under the Regulation has significance, particularly as to the determination concerning embezzlement, to be explained below, as well as tax exemptions and incentives. In this respect, pursuant to Provisional Article 32 of the Banking Law, debtors incorporated in Turkey, and which do not fall under the scope of the Banking Law, Insurance Law No. 5684, Law on Leasing, Factoring and Financing Companies No. 6361, Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions No. 6493, and institutions that fall under the scope of Article 35 of Capital Market Law No. 6362 aside from investment corporations.

Under the Restructuring Regulation, it is foreseen that financial restructuring shall be conducted in order to enable the debtor to repay its debts within a reasonable period of time within the provisions, procedures and principles determined by the Banking Law and the Regulation. It is further regulated that any other refinancing transaction carried out by means of revalidation, installments, collateral, additional facilities, and other refinancing transactions, shall not be considered within the scope of framework agreements, and agreements executed, respectively, under the Regulation pursuant to Provisional Article 32 of the Banking Law.

Accordingly, similar to the provisions of the Regulation, Provisional Article 32 of the Banking Law stipulates evaluation of the financial position of debtors and recovery of solvency as a consequence of the restructuring as two conditions for restructuring. Respectively, it is foreseen that the debtors evaluated that will not regain their solvency shall not be involved in restructuring.


Pursuant to Provisional Article 32 of the Banking Law, the following precautions might be taken:

  • To extend the term of the facility;
  • To novate the facility;
  • To grant an additional facility;
  • To deduct or waive from any kind of receivable arisen under the facility relationship, such as capital, interest, default interest, penalty for delay and premiums;
  • To reduce collaterals;
  • To convert capital or premium receivables to contributions;
  • To transfer or assign to special purpose vehicles and investment funds in consideration of cash or in kind return, or a certain amount conditional upon collections;
  • To liquidate, or sell, fully or partially, in consideration of the assets belonging to the borrower or a third party;
  • Derecognition; or
  • To execute protocols.

Accordingly, most of the methods implemented, in practice, through restructuring processes have been listed in the provision. In addition, as the ones listed are not numerus clauses, other methods are allowed, as well.

Qualification of Restructuring

Through the Regulation introduced to Provisional Article 32, it is foreseen that the restructuring processes conducted under the same Article shall not constitute embezzlement under Article 160 of the Banking Law. Under Provisional Article 32 of the Banking Law, in addition to the provisions of the Regulation, it is regulated that the valuation of collaterals of credits, or the fair value of the assets and liabilities of the borrowers to be acquired by the creditor institutions, shall be made by the institutions authorized to conduct the valuation by the Capital Markets Board, upon the request of one of the parties. Through the said provision, the uncertainty that had arisen in relation to the institution to conduct such valuation was, thereby, eliminated.


As a result of difficulties confronted by financial institutions in collecting their receivables, due to the consequences of economic conditions and the provision introduced to the EBL concerning concordat procedures thereunder, a legal background has been established for restructuring processes through the Regulation and Provisional Article 32 of the Banking Law. The provisions of Provisional Article 32 of the Banking law shall be implemented for two years and through the provision to extend such period has been granted to the President. The explained Regulations on restructuring has eliminated various concerns that have been confronted by financial institutions.

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.