Concordat is a legal opportunity that enables the debtor to make payments within the framework of favorable conditions as a result of the acceptance of the proposal by the creditors with a qualified majority (50+1) 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 Project Preparation
Preparation of the concordat project, with the announcement to be made after the notification of the receivables and the completion of the examinations related to them. The creditors are invited to the meeting to negotiate the concordat project. The commissioner chairs the meeting of creditors and gives a report on the situation of the debtor. The debtor is obliged to be present at the meeting to make the necessary explanations.
- Half of registered creditors and receivables, or
- One-fourth of registered creditors and two-thirds of creditors
It is deemed to have been accepted if it is signed by the majority. Only creditors affected by the concordat project will be able to vote. The court examines the commissioner’s report and other necessary documents and decides whether the concordat will be approved within the definite period. If the court cannot make a decision within the definite time, it can extend the period for a maximum of 6 months.
What are the Required Conditions for Confirmation of the Concordat?
- Concordat approval of the concordat project by the court depends on the fulfillment of the following conditions;
- Understanding that the offered amount will exceed the probable amount that would be available to creditors in the event of the debtor’s bankruptcy.
- The amount offered is commensurate with the borrower’s resources.
- The concordat project has been accepted with a majority exceeding half of the registered creditors and receivables, or one-fourth of the registered creditors and two-thirds of the receivables.
- The fact that the receivables of the privileged creditors are fully paid and the performance of the debts concluded with the permission of the commissioner within the time limit is provided with sufficient collateral, unless the creditor expressly waives it.
- The court expenses required by the approval of the concordat and the fee that must be collected over the money agreed to be paid to the creditors in case of the approval of the concordat, have been deposited by the debtor in the court cashier before the approval decision.
The concordat process is quite tiring and requires technical knowledge. Below, we have explained the process to you in items;
1) Concordat request: At this stage, the debtor and the creditor apply to the court with a request for concordat.
2) Temporary respite: At this stage, if the court deems necessary, it may impose an injunction on the debtor’s assets and appoints a commissioner of concordat temporarily. The duty of the commissioner is to continue the activities of the enterprise, to prepare an interim report and to supervise the debtor.
3) Decisive deadline: A definite deadline is given for the concordat that is thought to result in a positive result. At this stage, interim injunction and precautionary attachment decisions will not be implemented. The commissioner will continue to work and the debtor will not be able to perform transactions such as establishing a pledge or being a guarantor without his permission. The concordat process may be terminated if the debtor is in a position to pay his debt and his situation improves before the final deadline ends.
4) Assembly of Creditors In a meeting to be held at this stage, it will be decided how the debtor will pay his debt and the Concordat Project will be created. The said meeting will be held under the chairmanship of the commissioner and the participation of the debtor is obligatory.
5) Certification and Announcement of Concordat: This is the stage where the court evaluates the debtor’s request for concordat. If the court decides to reject the concordat at this stage, an ex officio bankruptcy decision may also be given. If the request is accepted, how the debtor will pay his debt and how much of the creditors’ receivables have been waived are evaluated. At this stage, a trustee will be appointed to report to the court every two months.
6) Terms and Results of the Concordat: The concordat will now become binding once it is approved by the court.
7) Termination: The concordat, which was injured in bad faith, is completely terminated if bad faith is proven. If the creditor, who is not paid by the concordat project, applies to the court, it is possible for him to have the concordat terminated partially.