Bankruptcy delays banned during state of emergency
The government announced a ban on the petitions for bankruptcy delay, the number of which has risen at a fast pace in recent years, during the period of state of emergency proclaimed on July 20, to be effective for a three-month period. This follows the failed coup attempt on July 15 by a military junta loyal to the Gülenist Terror Organization (FETÖ), which killed 246 people and injured over 1,500.
Through a decree published in the official gazette on Sunday, the government said that petitions regarding the delay of bankruptcy will be denied by courts.
The 179th article of the Bankruptcy and Enforcement Law underpins bankruptcy delays. According to the article, if it is proven that the assets of an equity firms or cooperatives exceed the liabilities, and evidence of this is approved by the court, then the firm is permitted to officially file for bankruptcy. Under the same law, it is possible to gather the documents showing that the firm or cooperative is able to ameliorate their financial situation with the aim of delaying bankruptcy. If the court finds the documents submitted regarding the delay as credible and rightful, it would then permit a delay of bankruptcy.
In Turkey, it takes time for a firm to eventually declare its bankruptcy. Under the current legal framework, when the petition for bankruptcy delay is accepted, the indebted side cannot be tracked in any way. Even pursuit processes initiated prior to the decision for delay are ceased. By use of this delay, firms would gain two years on average to financially strengthen their financial statements.
That petitions for bankruptcy delay became popular among well-known big firms started discussions over the issue. Implying a misuse of the bankruptcy delay, Chairman Rifat Hisarcıkoğlu Turkish Union of Chambers and Commodity Exchanges (TOBB) remarked a few months that bankruptcy delay is being used for self-seeking purposes by some parts of the business world, adding that there are even brokers in Anatolia who specialize in how to delay bankruptcy, giving advertisements claiming to be financial consultants.
Through a decree published in the official gazette on Sunday, the government said that petitions regarding the delay of bankruptcy will be denied by courts.
The 179th article of the Bankruptcy and Enforcement Law underpins bankruptcy delays. According to the article, if it is proven that the assets of an equity firms or cooperatives exceed the liabilities, and evidence of this is approved by the court, then the firm is permitted to officially file for bankruptcy. Under the same law, it is possible to gather the documents showing that the firm or cooperative is able to ameliorate their financial situation with the aim of delaying bankruptcy. If the court finds the documents submitted regarding the delay as credible and rightful, it would then permit a delay of bankruptcy.
In Turkey, it takes time for a firm to eventually declare its bankruptcy. Under the current legal framework, when the petition for bankruptcy delay is accepted, the indebted side cannot be tracked in any way. Even pursuit processes initiated prior to the decision for delay are ceased. By use of this delay, firms would gain two years on average to financially strengthen their financial statements.
That petitions for bankruptcy delay became popular among well-known big firms started discussions over the issue. Implying a misuse of the bankruptcy delay, Chairman Rifat Hisarcıkoğlu Turkish Union of Chambers and Commodity Exchanges (TOBB) remarked a few months that bankruptcy delay is being used for self-seeking purposes by some parts of the business world, adding that there are even brokers in Anatolia who specialize in how to delay bankruptcy, giving advertisements claiming to be financial consultants.