Significant Amendments are Introduced to the Enforcement and Bankruptcy Law
Pursuant to the Law Amending the Enforcement and Bankruptcy Law and Other Laws (“Amending Law”) published in the Official Gazette dated 19.06.2021 and numbered 31516, the Enforcement and Bankruptcy Law numbered 2004 (“EBL”) has been amended.
Significant regulations introduced by the Amending Law can be summarized as below:
- As per the addition to Article 223 of the EBL, the procedures and principles of the selection of bankruptcy administration officers are set. Bankruptcy administration officers shall now be selected from the lists prepared by the district councils of experts.
- As per the amendment to Article 241 of the EBL on the conversion of bankruptcy estate into cash, the sale of an entity in its entirety is now possible if the entity consists of goods and rights that will generate higher value if sold as a whole. It is also ruled that the procedures and principles on this matter shall be regulated by a regulation to be published.
- As per the addition to Article 295 of the EBL, an exception is regulated which allows conversion of pledged goods into cash during the definitive concordat term. Accordingly, if a pledged good is not intended to be used by the entity in line with the concordat project, or if its value will decrease in the meantime or its preservation will be costly, such pledged good can be converted into cash within the definitive term.
- As per the amendment to Article 296 of the EBL, it is regulated that as a rule, duties arising from ongoing contracts shall be performed during the temporary or definitive concordat term. However, the contracts that are extremely burdensome for the debtor may be rescinded if certain conditions are met.
- As per the amendment to Article 297 of the EBL, it is ruled that the debtor shall not sell immovable or movable property that is significant for the continuation of the entity without obtaining the approval of the court. The approval of the court is subjected to the precondition that the assembly of creditors shall also approve the sale.
- As per the addition to Article 308 of the EBL, the liquidation procedure if the concordat results in bankruptcy is regulated.
- As per the amendment to Article 308/c of the EBL, it is ruled that the debts obtained after the temporary concordat decision with the approval of the concordat officer, including the credits obtained from credit institutions, shall not be subject to the ordinary concordat provisions. Accordingly, if the debtor defaults on these debts, the creditors can initiate enforcement proceedings and they will be prioritized over other creditors except from the pledgees.
The Amending Law enters into force on the date of publication.
You may find the Turkish version of the Amending Law here.
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