Execution and Bankruptcy Crime – Reducing Assets with the Intent to Harm Creditors
The crime of reducing assets with the intent to harm creditors is regulated in Article 331 of the Bankruptcy and Enforcement Law as an execution crime.
For the material elements of the crime of reducing assets with the intent to harm creditors to be fulfilled, the debtor must artificially reduce their assets by removing, destroying, or devaluing all or part of their property, or by transferring them to another party through collusion, either genuinely or through concealment, or by acknowledging fictitious debts, or by removing an accessory within the scope of a real estate mortgage from the property. In this case, execution crimes will have occurred.
Furthermore, for the crime of intentionally reducing one’s assets with the intent to harm a creditor to occur, the debtor’s actions must have been committed within two years prior to or after a request for enforcement proceedings, as explicitly stated in the law; within two years prior to a request for bankruptcy proceedings or, in cases of direct bankruptcy, within two years prior to a request for a moratorium or postponement of bankruptcy; or after a request for a moratorium or postponement of bankruptcy.
The debtor must have committed these actions “with the intention of harming the creditor,” and the debtor’s specific intent to commit these enforcement crimes is a prerequisite for the crime to be constituted.
The law also stipulates that the existence of a certificate of insolvency or proof that the debtor has been unable to collect the debt is a prerequisite for the crime of intentionally reducing one’s assets with the intent to harm a creditor to occur. The certificate of insolvency mentioned here is the definitive certificate of insolvency obtained according to Articles 105/1 and 143 of the Turkish Enforcement and Bankruptcy Law. Obtaining a temporary certificate of insolvency is not sufficient for the commission of enforcement crimes due to the intention to harm the creditor by reducing one’s assets.
The crime is prosecuted upon complaint, and the complaint must be filed within 3 months of the date the crime is learned, and in any case within one year.
The competent court for enforcement crimes is the Enforcement Criminal Court. The authorized court for enforcement crimes is the court of the debtor’s place of residence or the court of the place where the crime was committed.
The reasons listed in the law as grounds for enforcement crimes are as follows: The debtor must dispose of their assets or parts thereof, destroy or diminish the value of these assets to the detriment of the creditor, transfer their assets to another person through genuine means or collusion, artificially reduce their assets by accepting fictitious debts, or remove the possessor of an accessory subject to a real estate mortgage from the property with the intention of harming the mortgagee.