Minister GÜL: Amendment to the law protects the interests of debtors and creditors both 01.02.2018
The Draft Law on Making Amendments to the Law on Execution and Bankruptcy Law and to Some Laws for the Improvement of the Investment Environment which was prepared by the Ministry of Justice is submitted to the Grand National Assembly of Turkey. Concerning the draft, Minister of Justice Abdulhamit Gül said; "We will abolish the institution for the postponement of bankruptcy. We will put into effect a new reform, an arrangement which protects both the interests of debtors and creditors."

Minister Gül stated that, within the scope of the draft, it is foreseen to make amendments to some laws; mainly including the Law on Execution and Bankruptcy, Turkish Commercial Code, Cooperatives, Civil Procedure Code, International Arbitration, Notification, Law on the Collection Procedure of Public Receivables and notified that the bankruptcy postponement which has been implemented since 2003 will be abolished. Minister Gül also stated that it is determined that the expected recovery of financial status and revival of the companies due to bankruptcy postponement could not be realized, and remarked that the creditors are in loss since they could not collect their receivables from debtors.

A REFORMIST AMENDMENT

Stating that concordat will be applied instead of bankruptcy postponement together with the mentioned reformist amendment, Gül added that "the requirement of becoming bankrupt" will not be required to demand concordat. Minister Gül said that the debtors who are insolvent or likely to be insolvent in the near future can demand concordat.

Gül underlined that the debtors will submit the documents showing their financial status to the court within the scope of the concordat with the demand for the reduction or reconstruction of debts. Gül said that the courts will give a three-month temporary period to the debtors within the scope of the concordat and added that the mentioned period shall be extended for maximum 2 months. Gül also said that, together with the decision for temporary extension of time, creditors other than pledged creditors will not be able to file execution proceedings against the debtor. Expressing that concordat commissioners will be appointed by the courts which will also take measures for the protection of property, Gül announced that the mentioned commissioners would supervise the activities of the debtors.

AN EXTENSION OF TIME WILL BE GRANTED TO THE DEBTORS

Gül indicated that a one-year definitive extension of time will be granted to the debtors after it was understood that financial condition of the debtors might be better within that temporary period of time in the concordat. Minister of Justice Gül underlined that the definitive extension of time will be extended six months at most; therefore the temporary and definitive extensions of time in the concordat will not be able to exceed totally 23 months. Minister Gül said that; "With the draft law which was prepared as part of the works to improve the investment environment, we will abrogate the institution for the postponement of bankruptcy as its abusive use has been realized. We will put into effect a new reform which protects both the interests of debtors and creditors."

ALIMONY CREDITORS ARE NOT BOUND BY THE CONCORDAT

Gül noted that, courts in certain circumstances will establish "Board of Creditors" and added that this Board will allow the protection of the creditors' rights. He continued that the workers and alimony creditors will not be subject to the concordat and the mentioned creditors might be able to pursue execution against the debtor, and added; "We prepare a new important regulation on the bankruptcy process that will enable the business to resume its activities. In this context, the manufacturing site, store or workplace of the bankrupt person will not be shut down. This precaution will enable the continuance of the financial activities, thus the business will pay the debts by still producing and employing workers."

NEW COURTS WILL BE ESTABLISHED

Gül explained that through the legalization of the draft law, specialized courts will be determined which are tasked to deal with demands of bankruptcy and concordat by the Council of Judges and Prosecutors (CJP). An important other regulation will be regarding the Notification Law which will make electronic notification compulsory. He noted that, authorities competent in issuing notifications including the courts will convey notifications electronically to public institutions, mediators, court experts and indicated natural and legal entities. Minister Gül also added; "The new regulation will allow a faster and more secure delivery of notifications. The electronic notification to be made compulsory will accelerate the trials, remove the obstacles in the way of the delivery of notifications and the notification costs will be reduced. Thus, 30 million out of 40 million annual notifications will be sent electronically."

Judiciary of Turkey