Concordat decision for 605 companies in 6 months

As a result of tight monetary policy, many companies that cannot access hot money and, in particular, suffer from insufficient working capital are facing the threat of forced execution. The rise in forced execution proceedings is driving qualified debtors toward the concordat institution.

For many firms that have received a temporary grace period decision but are unable to manage the concordat process correctly, bankruptcy rulings are being issued, raising concerns that more bankruptcies could occur in the near future. Former enforcement director and lawyer Mustafa Zafer has also issued warnings regarding the potential for a 'mass bankruptcy process' in the evaluation of concordat requests.

Stating that the concordat, which was regulated after the abolition of the institution of postponement of bankruptcy in 2018, has become a favorite for large debtors, Zafer said, "Although it may appear as a remedy for individuals and institutions that want to postpone their debts to some extent or close them at a lower cost, even if a temporary grace period decision is granted upon the filing of the case following poorly read balance sheets, a bankruptcy decision is issued in the concordat for many firms."

In this context, a temporary grace period decision in concordat was issued for 419 firms in 2020, 451 in 2021, 404 in 2022, 519 in 2023, and 605 firms in the January-June period of 2024.

Pointing out that greater economic problems could be experienced, Zafer made the following statements:

“Initially, while there may be only a single debtor company wishing to pay its debts by rescheduling or through discounts, the prolongation of the judicial process, the inability of creditors to collect their receivables, and the fact that the debtor company's creditors in the supply chain fall into actual insolvency (raw materials, rent, taxes, salaries, etc.) because they cannot generate income may lead to the experience of greater economic problems.

In the evaluation of concordat requests, encountering a massive chain bankruptcy process, and given the possibility that concordat creditors may face situations they do not want in legal and criminal terms, it is necessary to act meticulously in the process when making decisions and to protect the rights of not only the debtor but also the creditors.”

Former enforcement director and lawyer Mustafa Zafer stated that 4 million 511 thousand 698 new enforcement proceedings were initiated in the first half of the year.

According to the report in Sözcü, Mustafa Zafer drew attention to the proceedings to be conducted if requests for a temporary grace period in concordat are accepted in cases where financial statements, especially in companies with high turnover but low profit margins, do not reflect the truth due to a lack of legal infrastructure. He stated, "In cases where the concordat request is rejected and a decision is made to open bankruptcy, all individuals and institutions, especially the debtor company's creditors, as well as those working in the supply chain and those in commercial relations with the company that declared concordat, may be negatively affected by this situation."