WHAT IS CONCORDAT AND WHAT ARE ITS CONDITIONS?
Introduction
The Bankruptcy Postponement Provisions of the Enforcement and Bankruptcy Law were repealed by the “Law No. 7101 on the Amendment of the Enforcement and Bankruptcy Law and Certain Laws” published in the Official Gazette dated 15 March 2018. With this amendment, “postponement of bankruptcy” has been abolished and the scope of “concordat” has been expanded.
The length of the judgement and implementation period, the inability of the court to fully supervise the companies in the process of postponement of bankruptcy and the inability of the creditors to intervene in the process caused many problems.
Due to these negativities, the bankruptcy postponement system has been abolished and a concordat system has been arranged in which the trial process and duration are certain and the creditors can have more say and the debtor can be better supervised.
WHAT IS CONCORDAT ?
Concordat is the ability of a debtor to pay all of its ordinary (not pledged or privileged) debts in line with this offer, provided that the payment offer made by a debtor to its creditors through the court is accepted by at least half of the creditors (or 2/3 in certain cases) and approved by the Commercial Court. If the debtor has a request for pledged receivables and it is accepted by the pledged creditors, the pledged debts are also included in this scope.
As can be understood from this, in order for the concordat proposal to become binding on the creditors, it must be accepted by a certain majority of the creditors and must also be approved by the court.
Who Can Request Concordat?
Concordat is not an institution that everyone can benefit from. First of all, the title of the person who will request it must be a creditor or a debtor. Then these parties must fulfil the specified conditions. In other words, debtors and creditors may request concordat provided that certain conditions are met.
One of those who can request concordat is the debtor party. Those who cannot pay their debts due or those who are in danger of not being able to pay their debts when they come due may request concordat. In this way, the debtor wants to get rid of bankruptcy.
Another group that can request concordat is the creditors. If the debtor is subject to bankruptcy and the creditor has the right to claim bankruptcy, he can also request concordat. In other words, concordat cannot be requested by the creditor for the debtor who is not subject to bankruptcy. In addition, the creditor who does not have the right to claim bankruptcy cannot request concordat.
How to Request Concordat?
The concordat request is submitted to the court by the persons who have the right to request it. If the debtor is subject to bankruptcy, concordat is requested from the Commercial Court of First Instance in the place where the company’s head office is located, or in the place of residence if it is not subject to bankruptcy. The court rejects or accepts the concordat request after its examination. In case of acceptance, the process foreseen for concordat begins. Making the concordat request correctly is important for the process to proceed quickly. Therefore, working with a lawyer will ensure that the process is complete and fast.
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