Concordat Law
Concordat is a specialized legal mechanism that allows debtors who are facing payment difficulties, but are still able to continue their operations, to restructure their debts while protecting creditors’ rights. It aims to safeguard the financial structure of companies or individual traders under the threat of bankruptcy, ensuring continuity in economic life.
Conducted under court supervision and involving thorough financial and legal review, the process seeks to enable the debtor to restructure their debts within a reasonable timetable and conditions. The goal is to ensure both the debtor’s survival and partial satisfaction for the creditors.
What Is a Concordat?
A concordat is a type of “bankruptcy protection agreement” made between the debtor and creditors and approved by the court. The debtor applies to the court to request a concordat, and the court grants a temporary stay based on the financial data presented. During this period, the debtor’s assets are protected, and no enforcement proceedings can be initiated against them under the law. The concordat plan is prepared, presented to creditors for voting, and finalized upon court approval.
Types of Concordat
There are three types of concordat under Turkish law:
Ordinary Concordat: A general agreement in which the debtor negotiates with creditors for partial debt forgiveness or extended repayment terms.
Concordat During Bankruptcy: An agreement made between creditors and a debtor who has already been declared bankrupt.
Concordat by Asset Surrender: The debtor transfers all assets to creditors to be relieved from debts.
The most commonly applied type is the ordinary concordat, used by companies and individual debtors facing payment difficulties.
How Does the Process Work?
The concordat process begins with an application to the competent Commercial Court of First Instance. Along with the petition, the debtor submits financial statements, debt amounts, creditor lists, asset inventories, and the concordat plan. If the court finds the request credible and supported by financial data, it grants a temporary stay and appoints a concordat commissioner.
During the temporary stay, the debtor cannot pay debts, and creditors cannot initiate enforcement proceedings. Based on the commissioner’s examination, the court grants a definitive stay, during which the concordat plan is voted on. If a specified majority of creditors approve the plan, the concordat is ratified and becomes legally binding.
Who Can Apply?
Any trader or company subject to bankruptcy can apply for a concordat. For approval, the debtor’s intent must be genuine, the financial situation must be correctable, and the concordat plan must be based on economic realities.
Sayın Law Office Approach
At Sayın Law Office, we provide comprehensive legal counsel and representation for traders entering the concordat process. Before the application, we perform all necessary financial and legal analyses, prepare the application file thoroughly, and meticulously manage the process from start to finish. Our approach adapts to the specific characteristics of each debtor and the creditor profile in each case, ensuring a dynamic and fully controlled process.
From meetings with the concordat commissioner and negotiations with creditors to court proceedings and obtaining the ratification decision, our experienced team is by our clients’ side at every step. Additionally, we provide effective representation in monitoring the process on behalf of creditors, filing objections, and protecting legal interests.
During economic crises, the correct and effective use of legal instruments like concordat is crucial for keeping businesses afloat while preventing creditors from being harmed. Sayın Law Office stands out by evaluating this process from both legal and economic perspectives, offering a multifaceted approach that delivers real results.