In commercial life, businesses can grow by evaluating opportunities and risks, and sometimes they can end their commercial life by going bankrupt. Bankruptcy means the death of the business. In case of bankruptcy, the shareholders, creditors, customers, sellers, workers and everyone related to the business suffer.
Despite being included in the Enforcement and Bankruptcy Law, the concordat practice, which could not become operational due to difficulties in implementation, became applicable with the amendments made with the law numbered 7101, which entered into force on 15.03.2018.
With the amendments made, articles 179/a-b-c of the Execution and Bankruptcy Law and article 377 of the Turkish Commercial Code were abolished and concordat provisions were established instead. Concordat provisions are regulated in Articles 285 and 308 of the Enforcement and Bankruptcy Law. With the Concordat, it was aimed to restructure the capital companies and cooperatives through reconciliation, to pay their debts and continue their activities. With the amendment made, the right of concordat was also granted to non-traders.
AG Audit also provides services in this field with its expert team experienced in Bankruptcy Postponement and Concordat applications. It carries out the whole process up to the court stage and delivers the file to the legal counsel of the company who will follow the case.
What is Concordat?
Concordat is a legal opportunity that makes it possible for the debtor to make payments under favorable conditions as a result of the acceptance of the debtor’s offer by qualified majority (50+1) creditors and the court decision. In fact, a concordat is an agreement between the debtor and his creditors under the conditions specified in the law.
Concordat is an institution that protects both the debtor and the creditor.
There are 3 types of concordat;
Maturity Concordat: It foresees the spread of debts to a certain maturity. With the acceptance of more than 50% of the creditors, these debts are paid to all creditors within the terms specified in the project.
Reduction Concordat: It is stipulated in the project to pay a certain percentage of the debts. With the acceptance of more than 50% of the creditors, these debts are paid to all creditors in deductible form on the due date of the debt.
Mixed Concordat: It is a concordat that foresees both a deduction and an extension of maturity. With the acceptance of more than 50% of the creditors, these debts are paid to all creditors in reduced form at the terms specified in the concordat project.
Who Can Apply for Concordat?
Any debtor who is unable to pay his debts when they are due or is in danger of not being able to pay on due date may request a concordat in order to be able to pay his debts or to avoid a possible bankruptcy by giving a term or a discount.