Bankruptcy and composition are protective/constructive legal options for merchants and companies in financial difficulties. With Law No. 7101, the postponement of bankruptcy was abolished and the concordat was rearranged.
Bankruptcy (EBL art.154-218)
Reasons for Bankruptcy
- Failure to pay debts when it is due (insolvency)
- Declaring insolvency
- Balance sheet deficit and inability to meet obligations (TTK art. 376-377)
- Failure to make payments as a result of bankruptcy proceedings
Consequences of Bankruptcy
- All assets transferred to the bankruptcy estate
- Appointment of liquidator
- Equal and fair sharing of creditors
- End of trader title
- Some types of crimes (TCK art.161 - fraudulent bankruptcy, TCK art.162 - negligent bankruptcy)
Concordat (EBL art.285-309)
Types
- Ordinary concordat: Amnesty of debts to a certain extent or extension of maturity
- Concordatum by abandonment of assets
- Concordatum in bankruptcy:For the debtor whose bankruptcy process has started
Application Conditions (EBL article 286)
- A concordat project that allows the financial situation of the debtor to be improved
- Independent audit report
- Payment plan to existing creditors
- Possibility to continue normal economic activity
Processes
Effects of Definitive Deadline
- All enforcement and bankruptcy proceedings stop
- New follow cannot be started
- No interest accrued
- The debtor acts together with the commissioner in management
Supreme Court 23. HD Approach
The 23rd Chamber of the Supreme Court of Appeals accepts that for the approval of the concordat project, it must be "suitable for the interest of the creditors" and "the debtor has a real possibility of recovery", and that applications for the sole purpose of gaining time will be rejected.
Criminal Liability
- TCK Article 161 — Fraudulent bankruptcy: 3-8 years imprisonment
- TCK Article 162 - Negligent bankruptcy: Imprisonment from 2 months to 1 year
Jurisdictional and Competent Court
- Officer: Commercial Court of First Instance
- Authority: Debtor's treatment center
Concordatum and bankruptcy processes are very technical and sensitive. Process planning is mandatory with a lawyer specialized in enforcement-bankruptcy and commercial law.