Corporations and cooperatives in Turkey will have no right to demand postponement of bankruptcy during the state of emergency, declared as of 21 July 2016 for three months.
We have informed you that the state of emergency gives the government enhanced powers in every area; and that financial, material and labor obligations may be imposed on citizens within this period.
All claims of bankruptcy adjournments, which are being a controversial issue recently, are banned until the end of state of emergency period by Decree Number 669, dated 25 July 2016, issued according to State of Emergency Law No. 2935, which reads as follows;
“During the period of state of emergency, corporations and cooperatives cannot demand bankruptcy adjournment according to the article 179 of Bankruptcy and Enforcement Law Number 2004; such demands shall be rejected by the courts.”
The Decree can be interpreted as a precaution against the companies who have given financial support during the past years to the perpetrators of unsuccessful coup attempt on July 15th, and after a normalization process the above mentioned article is expected to be in force again.
WHAT IS BANKRUPTCY ADJOURNMENT?
Bankruptcy adjournment (also called postponement or suspension of bankruptcy) is arranged in the article 179 of Bankruptcy and Enforcement Law Number 2004, which is amended very recently. The Law aims to give the companies in financial difficulties an opportunity to improve their conditions by postponing their debts for a certain period. Such companies may be able to collect their receivables from other companies during the suspension period.
Companies (corporations and cooperatives) who want to benefit from this arrangement should file for bankruptcy adjournment and submit a recovery project to the court as a document of proof that company may be recovered in case such postponement is granted. If the project is found serious and convincing, the court will adjourn bankruptcy for one year and/or for additional another year, if it is found appropriate by the court.
Court may immediately appoint sufficient number of trustees to replace the managing body and ban every debt collection claims against the company, or stop the already started claims and take the necessary precautions to safeguard the assets of company and to ensure the maintenance of its operations.
The demands related to bankruptcy suspension will be tried with priority and as a matter of urgency, and the concerned parties may appeal against the final judgments of court or against the regional courts of justice.