Some documents must be submitted to the court when requesting concordat from the court. The documents required for the concordat request are specified in the law as follows;
Concordat preliminary project: The project showing when, how and how the debts will be paid and how the necessary resources will be provided is called the concordat preliminary project.
Documents showing the financial status of the debtor: Balance sheet, income-expense statement, documents indicating receivables and payables, and all kinds of documents to show assets must be submitted to the court for concordat request.
List of receivables: It is a list showing who the creditors are, how much the receivables are and which privileges the creditors have.
Asset comparison table with the project: This is a table comparing how much the creditors can obtain according to the preliminary concordat project to be submitted to the court and how much they can obtain in case of bankruptcy.
Financial analysis reports: The financial analysis reports prepared by the independent audit institution showing that the realisation of the concordat preliminary project is possible must also be submitted with the concordat request.
Concordat Project
The debtor company requesting concordat must submit a preliminary concordat project to the court. The concordat project is a plan that shows at what rate and in which term the debtor will pay its debts and how it will provide resources to pay the debts. If the concordat request is accepted, the concordat plan is tried to be fulfilled. In the preparation of the concordat project, it is important to obtain consultancy services from law offices experienced in this field. You can get help from our lawyers in this regard.
CONCORDAT RESPITE:
The law provides for a decision to protect the assets of the debtor and to control the debtor during the judicial process from the request of the concordat until its approval. Upon the request for concordat, the court will immediately issue a temporary respite decision when it determines that the necessary documents are available in full, and will take the measures it deems necessary to protect the debtor’s assets. The court has no discretion in this matter; it must grant the temporary respite.
Upon this decision, which is referred to as “granting a respite” in the law, no enforcement proceedings may be initiated against the debtor requesting concordat through foreclosure, the foreclosure proceedings initiated shall be suspended, proceedings may be initiated through foreclosure of the pledge, but the pledged goods may not be sold, and no precautionary attachment and precautionary injunction shall be applied against the debtor. The debtor may continue its business under the supervision of the commissioner. The debtor may not establish a pledge, become a surety, or transfer its immovable and movable property, except with the permission of the court.
The Law has introduced a distinction between temporary respite and definitive respite, but there is no difference between them in terms of their effects, both have the same consequences. The purpose of the provisional respite is to protect the assets of the debtor during the period until the examination, evaluation and hearing required for the granting of a final respite. The effects of the respite continue until the concordat becomes binding.
Provisional Suspension in Concordat
If the court decides that the necessary documents have been submitted in full after the concordat request, it grants a temporary respite for the debtor. The temporary respite period is 3 months as a rule. Before the 3 months expires, the debtor or the temporary commissioner may request an extension of the temporary respite by showing the reason. Upon this request, the temporary respite may be extended for a maximum of 2 months. The temporary commissioner is the person appointed by the court to examine whether the concordat will be successful or not.
The temporary respite decision is announced in the places specified in the law. In this announcement, it is also written that the creditors can make their objections that the respite should not be granted within 7 days. If the objections are examined and justified, the concordat request may be rejected. If the results targeted by the concordat are achieved within the temporary respite period, the commissioner notifies the court and the concordat request is rejected.
granting of a final respite (Art. 289 of the EBL)
The court shall open a hearing within the temporary respite and invite the debtor and the creditor requesting concordat, if any, and the temporary commissioner if deemed necessary. If the court examines the documents submitted to the file, the report of the provisional commissioner and the objection reasons put forward by the objecting creditors in their petitions, and if it is understood that it is possible for the concordat to succeed, the debtor is granted a 1-year final respite. This process will be completed within the temporary respite. In other words, the final respite decision is given within the temporary respite period.
With the final sealing decision, if the court does not see the need for a new appointment, it decides that the temporary commissioner continues his duty and submits the file to the commissioner.
In addition, the court may establish a board of creditors together with the final respite decision or at a time to be deemed appropriate within the final respite, provided that it does not exceed seven creditors, no fee is assessed and it is an odd number. In this case, classes of creditors whose claims differ from each other in terms of legal nature and pledged creditors, if any, shall be represented in the board of creditors in an equitable manner.
The board of creditors shall convene at least once a month and take decisions with the majority of the votes of those present. The commissar shall be present at this meeting and shall record the decisions taken by obtaining the signatures of the participants of the meeting.
The final respite may be extended up to 6 months by the court upon the request of the commissioner or the debtor, upon the opinion of the commissioner and the creditors’ committee, if any. The decisions regarding the granting of a definite respite, the extension of the definite respite and the rejection of the concordat request by lifting the definite respite shall be announced and notified to the relevant places.
Board of Creditors in Concordat
The court may also decide to establish a creditors’ committee if it deems necessary while making a final respite decision. The creditors’ board is an institution consisting of a maximum of 7 creditor members and established to prevent the creditors with different types of receivables from being victimised. The board of creditors must hold a meeting at least once a month. In this meeting, a decision is taken by majority vote.
The creditors’ committee may make recommendations to the commissioner and the court. If deemed necessary, the creditors’ board may request the court to dismiss the commissioner and appoint a new one.
Meeting of Creditors in Concordat
Upon the expiry of the final respite, the concordat commissioner shall publish an announcement stating that the creditors must declare their receivables. Creditors who do not declare their receivables upon this announcement cannot participate in the concordat project negotiations. Following this call, the concordat commissioner applies to the debtor to make a statement about the claims. After the claim, the debtor’s statement and the examination of the documents and books, the commissioner prepares a report on the receivables.
After all these, the concordat commissioner invites the creditors to a meeting of creditors to discuss the concordat project. Creditors may examine all documents related to the concordat project before the meeting. The creditors’ meeting is held under the chairmanship of the commissioner. The debtor must also be present at the meeting in order to make statements. The approval of more than ¼ of the forfeited creditors and ⅔ of their claims or more than half of the forfeited creditors and their claims is required for the concordat project to be accepted. Creditors who will not be affected by the concordat project cannot vote at the meeting of creditors.
Approval of Concordat by the Court
The conditions required for the court to approve the concordat project accepted at the creditors’ meeting are listed as follows in the law;
In ordinary concordat, it is understood that the amount offered will be more than the possible amount that may be obtained by the creditors in the event of the debtor’s bankruptcy; in concordat by abandonment of assets, it is understood that the proceeds obtained in case of monetisation or the amount offered by the third party will be more than the amount that may be obtained in case of liquidation through bankruptcy.
The proposed amount is proportionate to the debtor’s resources (in this context, the court shall also determine whether the expected rights of the debtor will be taken into account and, if so, to what extent).
The concordat project has been accepted by the prescribed majority.
The payment in full of the receivables of the preferential creditors and the performance of the debts contracted with the permission of the commissioner within the respite period are adequately secured unless the creditor expressly waives this.
The judicial expenses required for the approval of the concordat and the fees to be charged on the money agreed to be paid to the creditors in the event of the approval of the concordat must have been deposited by the debtor to the court cashier before the approval decision.
Consequences of Concordat
With the approval of the concordat project by the court, the consequences of the concordat begin to arise. One of the consequences of the concordat is that the promises made by the debtor in amounts higher than those specified in the concordat project shall be invalid. Another one of the consequences of the concordat is the elimination of the attachments that were imposed before the temporary respite decision and not converted into money.
Concordat Period
The concordat period is 3 months for temporary respite, but it can be extended for 2 more months when the necessary conditions are met. The concordat period is 1 year for the final respite and can be extended for another 6 months if deemed necessary. Apart from this, the duration of the concordat is determined in the concordat plan.
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