A range of legislative changes have been made in Turkey following the attempted coup on 15 July 2016, as well as changes to the structures and compositions of government, military and judicial bodies. Notable aspects for companies include bankruptcy suspension requests being deemed invalid during the national three month State of Emergency, as well as increased powers for guardians appointed to companies under investigation.
Bankruptcy postponement requests suspended
Turkey has tightened up its postponement of bankruptcy regime. Bad faith debtors would regularly exploit the prior legislative arrangements and court processes, using them to threaten or bargain with their creditors by depriving them of enforcement and execution avenues for a significant and uncertain amount of time. However, legislative amendments go a significant way towards evening up the balance between creditors and debtors in this area.
Turkey has introduced regulations regarding new and existing bankruptcy suspension requests and company guardians in the wake of the 90 day of State of Emergency declared on 21 July 2016. Drastic changes have recently been introduced for the Turkish bankruptcy postponement regime (more).
Introduction
Postponement of bankruptcy
Comment
Introduction
On July 15 2016 Parliament enacted an omnibus bill which amended several laws. The Law on the Amendment of Some Laws to Improve the Investment Environment focuses on:
The Turkish collateralization system was recently updated through the introduction of the Law No. 6750 on Movable Pledges (the “Movable PledgeLaw”).
A foreign creditor has the right to initiate a lawsuit or an enforcement proceeding against a debtor in Turkey even if there is no reciprocal agreement between Turkey and the creditor's own jurisdiction.
In Cukurova Finance International Ltd v Alfa Telecom Turkey Ltd [2013] UKPC 2, the Privy Council held that a borrower may claim relief from forfeiture notwithstanding that the forfeited security has been appropriated by the lender in satisfaction of a debt.
American and British directors of corporations should be mindful of the different standards of conduct, obligations, and potential personal liability when holding directorships in Turkish companies, particularly if such companies’ financial situation is deteriorating.
Turkish corporates have increasingly utilised international debt markets in the last decade, particularly in the infrastructure and energy sectors. These corporates are now under pressure due to recent political instability and depreciation of the Turkish lira. Restructuring candidates in 2014 have included Yuksel, the construction company which was last in discussions with bondholders and local lenders mid-year. Below we take a look at key legal issues for loan traders in Turkey.
Turkey has amended and clarified the requirements for collecting public receivables. Changes particularly apply to obtaining documents to show an overdue debt, calculating the limitation period, as well as deleting records. Further explanatory information is also provided for existing requirements.
The Ministry of Finance-Revenue Administration published the General Communiqué regarding Collection of public receivables in Official Gazette number 29686 on 16 April 2016.
Key changes introduced by the amendments include: