Recent Developments Regarding Concordat
Introduction
Important regulations regarding the Concordat are made with the Regulation on Concordat Commissar and Board of Creditors[1] (“Regulation on Concordat Commissar”), and The Regulation on the Documents to be Added to Concordat Request[2] (“Regulation on Documents”), entered into force through publication in the Official Gazette dated 30.01.2019 and numbered 30671. The regulations stipulated by these regulations are addressed in this article.
Regulations Made Within the Scope of the Regulation on Concordat Commissar and Board of Creditors
Primary regulations stipulated with the Regulation on Concordat Commissar[3] are the educational requirements of the commissar, liabilities of the commissar, disqualification of the commissar, forbidden operations for the commissar, principles of application to be a commissar, reasons for resigning from the commissariat, and the composition of the board of directors.
Regulations Regarding the Educational Requirements of the Concordat Commissar
The Regulation on Concordat Commissar regulates the subject of educational requirements of the concordat commissar. Accordingly, the commissar is obliged to receive fundamental education that consists of thirty-six course hours. Moreover, the commissars are required to obtain renewal education of no less than twelve hours, once in every three years. Education requirements for concordat commissariat given prior to entry into force of the Regulation on Concordat Commissar shall not be taken into consideration in the application for registration to the list of commissars.
The education of commissariat shall be given by universities that include a law faculty, Turkish Bar Association, and Union of Chambers of Certified Public Accountants and Sworn-In Certified Public Accountants of Turkey. Fundamental education shall be given by academicians who hold the title of professor, associate professor, or doctor, in the fields of civil procedure law, bankruptcy law, civil law, commercial law, administration, economy, finance or accounting.
According to the regulation, academicians who hold the title of professor, associate professor, or doctor, in the fields of civil procedure law, bankruptcy law, civil law, commercial law, administration, economy, finance or accounting are exempt from the mandatory commissariat educational requirements.
Regulations Regarding the Obligations of the Commissar
The obligations of the concordat commissar are regulated under the Regulation on Concordat Commissar. Accordingly, the commissar shall be impartial and objective in his duty and must personally perform his duty. Additionally, during the course of his duty, and after the termination of his duty, the commissar shall keep secret all the information that he became privy to due to his profession, shall not use the information he garnered due to his profession, or title, or authority, to gain benefit for himself or for a third party, nor shall he accept any gifts or act as intermediary. Moreover, the advertising ban for commissars is stipulated under the Regulation on Concordat Commissar.
The commissar who violates these obligations under the Regulation on Concordat Commissar shall be dismissed from duty by the court. This situation shall be notified to the regional board, and in the event the violation also constitutes a crime, the Office of Chief Public Prosecutor shall also be notified.
Regulations Regarding Disqualification of the Commissar and Forbidden Operations for the Commissar
According to the provisions of the Regulation on Concordat Commissar regarding disqualification of the commissar, the commissar shall not be involved in the process of concordat where his own interests, or the interests of his spouse, fiancée, relatives to the third degree by blood or marriage, his clients, persons he represents, or of whom he is the curator or legal adviser of, or his employer. In cases where the concordat is related to these persons, the commissar shall notify the commercial court of first instance that has made the assignment. In the event the court grants the application, the commissar shall be removed from his position.
According to the regulation regarding forbidden operations for the commissar, the commissar shall not conclude any contracts on his behalf, or on the behalf of third parties, within the scope of his duty. In the event the commissar concludes such a contract, the contract shall be invalid.
Regulations on Principles of Application to be a Commissar and Registration to the List of Commissars
Principles of application to be a commissar, and registration to the list of commissars, are regulated in detail in the Regulation on Concordat Commissar.
The interested person shall apply to the regional board of his place of residence or work with the documents specified in the Regulation on Concordat Commissar. The regional board shall register the relevant person to the list for three years, in the event it confirms that the conditions are satisfied. The court shall choose the commissar from the list that has been drawn up by the relevant regional board.
It is regulated under Article 5 of the Regulation on Concordat Commissar that in the event three commissars are assigned, one of them shall be chosen from amongst the independent auditors on the condition of operating in the city of the court. Thus, the Public Oversight, Accounting and Auditing Standards Authority shall notify the list of the independent auditors that meet the requirements of being a commissar to the regional board for registration. The lists shall be announced on the web site by the regional board.
The commissar shall notify any change of his information to the regional board for registration of this change on the list, together with the related documents, if any, within one month.
The situations wherein the commissar may be removed from the list by the regional board are also stipulated by the Regulation on Concordat Commissar. The president of the regional board shall make the necessary investigation regarding the conditions of removal of the commissar from the list, ex officio, or upon request, personally, or at the request of one of the members of the regional board.
Regulations Regarding Abstaining and Resigning From the Commissariat
Under the Regulation on Concordat Commissar, those who have difficulty in performing their duties due to physical disabilities or permanent disease, who carry out more than one commissar duty at the same time, and who have another reason that is deemed valid by the court, may abstain from accepting the concordat duty.
The request for abstaining from duty is made via petition that shall be submitted to the court that makes the assignment, within five days after the date of being made aware of the assignment. The reason for abstaining and relevant documents, if any, should be annexed to the petition. In the event the court decides, upon investigation, that the request is without merit, the commissar shall be obliged to accept the duty. If the commissar continues to abstain from duty in spite of this decision, the court shall assign another commissar and notify the regional board of the abstaining commissar.
In the event of emergence of a legitimate reason, the commissar may resign from duty within five days after the emergence of the legitimate reason.
Regulations Regarding the Board of Creditors
Under the Regulation on Concordat Commissar, formation of the board of directors, situations where the formation of a board of directors is mandatory, duties of the board of directors, and work procedures and principles of the board of directors, are regulated.
Regulations Made Within the Scope of the Regulation on Documents
Under the Regulation on Documents, procedures and principles regarding the documents that shall be annexed to the request of concordat are regulated.
Preliminary concordat project, documents demonstrating the financial status of the debtor, list of creditors and receivables, comparison table, and the audited report that gives reasonable assurance, shall be annexed to the concordat request. The mandatory contents of the preliminary project and documents to be submitted in the event the debtor is amongst the persons who are obliged to keep a commercial journal are specified under the Regulation on Documents.
Under the Regulation on Documents, stipulations of the audited report that gives reasonable assurance are regulated in detail. In the event the independent auditing institution reaches a positive conclusion regarding the realization of the concordat offer in the preliminary concordat project, it shall prepare an audited report that gives reasonable assurance. The audited report that gives a reasonable assurance is the document that is prepared by evaluating the evidence within the scope of Turkish Auditing Standards in accordance with the regulations of the Public Oversight, Accounting and Auditing Standards Authority. The signing auditing institution shall be liable for the contents of the report. The opinion of the auditor in accordance with the reasonable assurance level and other significant aspects are submitted to the court with this report.
Conclusion
Duties of the concordat commissar and documents that shall be annexed to the concordat application have been regulated in detailed with the regulations that entered into force on 30.01.2019. These regulations are to contribute to the effectiveness and objectivity of the concordat process.
[1] The Regulation on Concordat Commissar and Board of Creditors, OG, 30.01.2019, No. 30671, http://www.resmigazete.gov.tr/eskiler/2019/01/20190130-1.htm.
[2] The Regulation on Concordat Commissar and Board of Creditors, OG, 30.01.2019, No. 30671, http://www.resmigazete.gov.tr/eskiler/2019/01/20190130-2.htm.
[3] The Regulation on the Qualifications of the Concordat Trustee and Compulsory Formation of the Board of Creditor, OG, 02.06.2018, No. 30439, annulled with the Regulation on Concordat Commissar and Board of Creditors.
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