A Current Decision of the Assembly of Civil Chambers of the Court of Cassation Regarding the Right to Appeal Against the Decision Rendered on Concordat
Introduction
In general terms, concordat is a method of releasing the remaining debt regulated within the framework of the law of enforcement.[1] The concordat procedure, which is formed by the acceptance of all debts of the debtor, who cannot pay their debts even though they are due, within a certain period of time, by the creditors with a qualified majority indicated in the law and the approval of the competent court, aims to provide a solution to the debtor’s getting rid of the debt without resorting to harsh enforcement methods such as foreclosure and bankruptcy.
In accordance with the Enforcement and Bankruptcy Law No. 2004 (“EBL”), in the concordat procedure; it is envisaged that many different actors such as creditor, debtor, authorized court, and concordat commissioner will act in accordance with the conditions, deadlines and objection procedures detailed in the EBL. As a result of these detailed regulations, various discussions have arisen about who has right to appeal against the concordat project.
In this article, the current Assembly of Civil Chambers of the Court of Cassation decision on whether the creditor has to declare the reasons for objection before the approval hearing in order to obtain right to appeal against the decision rendered about the concordat and whether the creditor who casts negative votes against the concordat proposal has the right to appeal will be examined.
Application to Appeal Against the Decision Regarding the Concordat
Article 304 of EBL regulates the examination of the concordat, which is one of the most important stages of the concordat procedure, by the court. After the reasoned report of the concordat commissioner is submitted to the court, the trial begins and the court decides on the concordat within the definite deadline. As a matter of fact, the date of the attestation hearing is also announced during this trial. In addition, it is stated in this announcement that those who object can be present at the attestation hearing provided that they notify the reasons for their objection in writing at least three days before the hearing date.
As can be clearly understood from the wording of the law, pursuant to article 304 of the EBL, those who object to the concordat project will not be able to attend the attestation hearing unless they notify the reasons for objection in writing at least three days before the hearing date.
In addition, in Article 308/a of EBL, it is stipulated that the debtor or the creditor requesting a concordat against the decision rendered about the concordat can apply to appeal within ten days from the notification of the decision, and the other creditors who object to it, within ten days from the announcement of the attestation decision.
When Articles 304 and 308/a of EBL are examined together, it should be determined whether the term ‘other objecting creditors’, who are entitled to appeal, covers only the creditors who have declared their objections before the attestation hearing, or whether the creditors who have previously voted against the concordat project have the right to appeal.
Stages of Judgement
In the dispute, the concordat requester was requested to attest the concordat project pursuant to the Article 285 and the following provisions of the EBL, claiming that they were in a financial difficulty. At the end of the proceedings, the Court of First Instance decided to approve the concordat attestation request of the requesting party. After the appeal of the decision, the Regional Court of Justice decided to reject the appeal request on the grounds that they did not have the right to apply to the appeal, since they did not openly object to the final hearing (attestation hearing) despite the fact that the applicants objected to the concordat request.
Upon the cassation of the appeal decision, the 6th Civil Chamber of the Court of Cassation stated that the close interpretation of the concept of other creditors who objected in accordance with Article 304 of EBL would not be appropriate and that providing the opportunity to appeal only to those who objected before the attestation hearing would not be compatible with the right to legal remedies. For this reason, it has been stated that what the legislator means by the term ‘other objecting creditors’ are those who cast negative votes on the concordat project during the concordat meetings or during the accession period. Subsequently, it was determined that the party objecting to the concordat project within the period of accession had the right to apply to appeal, and the contrary decision of the Regional Court of Justice was reversed.
Decision of Persistence
Against the reversal decision rendered by the Court of Cassation, the Regional Court of Justice decided to resist with extremely detailed arguments. The Regional Court of Justice emphasized that the concept of ‘other objecting creditor’ refers to the creditor who attended the attestation hearing and raised their objections against the rejection of the request for attestation of the concordat and even if they voted against the concordat, the creditors who did not attend the attestation hearing did not have the right to appeal. In addition, it has been emphasized that there is no gap on the subject in the EBL, and it has been explained that this issue can only be limited by law regarding the restriction of the right to legal remedies and the current regulation contains a provision in this regard.
The Decision of the Assembly of Civil Chambers of the Court of Cassation
Upon the appeal of the decision of the Regional Court of Justice to resist, the dispute was brought before the Assembly of Civil Chambers of the Court of Cassation (“ACC”).[2] Evaluating the Article 304 and Article 308/a of EBL together regarding the dispute, the ACC basically determined who can apply to appeal against the decision regarding the concordat. It has been reiterated that, pursuant to Article 304 of EBL, the debtor, the creditor requesting concordat and other creditors who objected are given the right to appeal. In addition, it has been evaluated whether the concept of ‘other objecting creditor’ refers only to the creditor who declared his objections before the approval hearing, or whether the creditor who voted against the project also falls within this scope.
In its decision, the ACC also examined in detail the reasons behind the articles in dispute, rather than merely adhering to the letter of the law. Referring to the regulations in the Justice Commission and the justification of the article regarding Article 304 of EBL, it has been stated that the reason for granting the right to appeal only to the creditors who have submitted their objections before the attestation hearing is the concern that if each creditor presents their objections only by being present at the hearing, it may hinder the proceedings. In addition, it is specified that the structure of the concordat is completely formal, the attestation procedures are aimed to be completed as soon as possible when the regulations in the law on the concordat are examined, the legal remedy can be closed in the decisions in favor of the debtor and the legislator aims to conclude the process as soon as possible.
It was especially emphasized that the use of a vote against the proposed concordat project would not make any sense for the court of first instance, which examined the attestation request, during the process until the ACC submitted the final report on the attestation request of the concordat commissioners to the court.
In addition, the opinion of the 6th Civil Chamber of the Court of Cassation was also answered in the ACC decision by close interpretation of the Article 304 of EBL and that adopting an approach that closes the application to legal remedies for the creditors who do not attend the attestation hearing will prevent the freedom of claim. The ACC emphasized the basic principle of constitutional law that the right to appeal that not foreseen by the law cannot be accepted, even though with an interpretation. It has been stated that the regulation specified in accordance with Article 308 of EBL makes exercising the right to legal remedies, which is a fundamental right in the sense accepted by the Constitution, a condition of objection, and that this is a method of limitation in accordance with the Constitution. In addition, it has been evaluated that the term ‘other objecting creditor’ refers to the creditors specified in accordance with Article 304 of the EBL, and that this situation does not in any way constitute a violation of the right to legal remedies.[3]
As a result of all these evaluations, ACC rejected the approaches that the creditors who voted against at the creditors’ meeting or within the seven-day accession period proved their will by voting against and that the right to apply to a legal remedy should be accepted, and upheld the decision of persistence of the Regional Court of Justice.
Conclusion
Consistent justifications were put forward by the 6th Civil Chamber of the Court of Cassation regarding the possibility of recourse to other creditors who objected. However, considering that the concordat is envisaged as a way to establish the rights and receivables of the creditor requesting concordat, the debtor and all other creditors in the most reasonable way, the process should be completed as quickly as possible. Even allowing the parties who do not comply with the formal regulations specified in the law to apply to legal remedies may cause the concordat process to be prolonged with an objection not foreseen in the law. The letter and purpose of the law were correctly interpreted by the ACC and the application to the appeal procedure was completely closed for the parties who did not meet the conditions stipulated in accordance with Article 304 of EBL in order to provide the practical benefit envisaged by the concordat.
- Deren-Yıldırım, Nevhis / Yıldırım, Mehmet Kamil: İcra ve İflas Hukuku, Beta Yayınları, İstanbul 2016, p.517
- The decision of the Court of Cassation General Assembly, No. 2023/149 E., 2023/170 K., 08.03.2023 (www.lexpera.com.tr).
- See. The decision of the Court of Cassation General Assembly, No. 2023/149 E., 2023/170 K., 08.03.2023(www.lexpera.com.tr).
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