KÜHEYLAN HUKUK
Concordat Conditions, Deadline Process and Restructuring with Creditors within the Scope of EBL Article 285-309
This guide has been prepared based on the current provisions of the Enforcement and Bankruptcy Law No. 2004.
Summary Concordat is a legal process in which a company that cannot pay its debts on time or is in danger of not being able to pay them, restructures its debts by extending or reducing the maturity by reaching an agreement with its creditors under court supervision. This institution, regulated under Articles 285 to 309 of the Enforcement and Bankruptcy Law, aims to provide honest and well-intentioned debtors with the opportunity to continue their activities by saving their business from bankruptcy, while also offering creditors a higher collection rate than the amount they will receive in case of bankruptcy. The process begins with the temporary respite granted by the court, and ends with the acceptance of the project prepared under the supervision of the commissioner by the qualified majority of the creditors and the approval of the court.
1. What is Concordat? Concordat is a judicial restructuring process that allows a debtor in financial distress to pay his debts within the framework of a certain maturity plan or discount, with the approval of his creditors and the supervision of the court. The institution is regulated in Articles 285 and following of the Execution and Bankruptcy Law No. 2004, and its main purpose is to ensure that the honest debtor can continue its activities without being dragged into bankruptcy and at the same time to ensure that the creditors are satisfied at the highest possible rate. Concordatum and bankruptcy produce radically different results: while bankruptcy means the liquidation of the business and its termination, concordatum aims to restructure the debts and enable the business to continue its operations.
Criterion Concordat Bankruptcy Purpose Saving the business by restructuring the debts Liquidating the assets Process Agreement with creditors is essential Compulsory liquidation by court decision Result The business continues its operations Business activity ends Debt Situation Debts are restructured Debts are paid from the liquidation share Average Duration Approximately 1.5-2 years (temporary+definite respite) It can last for years 2. Types of Concordat In practice, three basic types of concordat stand out according to the financial situation and payment capacity of the debtor. In the maturity concordat, the debt amount does not change, only the payment period is extended; This type is suitable for borrowers who experience a temporary liquidity shortage but remain solvent in the long term. In a reduced concordat, creditors waive a certain percentage of their receivables and the remaining part is usually collected on a deferred basis; This type is preferred in businesses whose debt burden exceeds their payment capacity. The most common form in practice is the mixed composition, which combines both maturity extension and a certain amount of discount.
3. Who can request concordat? Regardless of whether he is a merchant or not, any real person who has difficulty paying his debts can request concordat; However, in order for the concordat to be accepted, the person must have income or assets that can cover his debts to a certain extent. Capital companies, private companies and cooperatives can also apply for concordat in order to continue their activities; For legal entities, the application must be made by the decision of the authorized body of the company. The law has kept this path open to every debtor who is in danger of not being able to pay his debts or who has actually fallen into payment difficulty, whether or not he is subject to bankruptcy.
4. Concordat Application Conditions 4.1. Financial Situation: Difficulty in Payment or Insolvency In accordance with Article 285 of the EBL, the concordatum request must be based on one of the situations where the debtor cannot pay its current debts on time (default) or has a foreseeable risk of becoming insolvent (liabilities exceed assets). The court seeks to present this situation with concrete and reasonable justifications.
4.2. Good Faith and Viable Project Requirement The debtor must act in accordance with the rule of honesty, must not intend to harm creditors, and must present a payment plan based on realistic, convincing and concrete economic data on how and when the receivables will be paid. Applications that are made solely to save time and are not applicable will be rejected by the court.
4.3. Required Documents: In accordance with EBL Article 286, the following documents must be attached to the application: preliminary concordat project; Documents showing the debtor's asset status (balance sheet, income statement, cash flow statement, interim balance sheets); List showing creditors, receivable amounts and privilege status; Table comparing the amount that will be received by creditors according to the concordat project and the possible amount that will be received in case of bankruptcy; An independent audit report that provides reasonable assurance that the project will be realized. In applications made with incomplete or inconsistent documents, the court gives time for completion; Serious deficiencies may require outright rejection.
5. Concordat Application Process 5.1. Appointed and Competent Court: If the debtor is a merchant, the application is made to the Commercial Court of First Instance where his headquarters is located, and if he is not a merchant, the application is made to the Commercial Court of First Instance where his place of residence is located. In addition to submitting the necessary documents along with the petition, the advance expense and security required by the court must also be deposited.
5.2. Temporary Respite If the court finds the application appropriate, it decides on a 3-month temporary reprieve at the first stage; If deemed necessary, it may extend this period for another 2 months. During the temporary respite period, new enforcement proceedings cannot be initiated against the debtor, existing proceedings are stopped, provisional attachments and measures cannot be applied; Statutes of limitations and limitation periods do not apply. During this period, the court appoints one or more concordat commissioners; The commissioner supervises the activities of the debtor and the debtor cannot make significant savings on his assets without the permission of the commissioner.
5.3. Definitive Respite: At the end of the temporary respite, if the project is deemed likely to be successful, in line with the commissioner's report and the court's evaluation, a definite respite is granted for a maximum of 1 year; In exceptional cases, this period may be extended for another 6 months. The definitive deadline is the most critical stage of the process: here the recovery plan is clarified, creditors' opinions are sought and the commissioner prepares his final report.
5.4. Creditors' Meeting and Voting: The concordat project is put to vote at the creditors' meeting held during the final deadline. In accordance with Article 302 of the EBL, for the acceptance of the project, the approval of a majority exceeding half of the registered creditors and receivables or a majority exceeding one-fourth of the registered creditors and two-thirds of the receivables is required. If this qualified majority is not achieved, the project is rejected.
6. Approval of the Concordat and its Results The project accepted at the creditors' meeting is submitted to the court for approval together with the positive report of the commissioner. The court decides on confirmation by taking into account not only the formal elements, but also the economic reality and the balance of creditor interests. The approval decision has the following results: Binding: The approved concordat is also valid for creditors who did not participate in the voting or voted against it; Creditors can no longer make a claim exceeding the amount and duration within the scope of the project. Finalization of enforcement proceedings: Proceedings that have been suspended during the grace period are concluded in accordance with the concordat plan once the confirmation decision is finalized. Suspension of interest: Unless the project contains a provision to the contrary, interest will cease to accrue on receivables that are not secured by pledge as of the definitive deadline date. Protection of the debtor: The debtor continues to be protected from the threat of bankruptcy and follow-up pressure as long as the debtor acts in accordance with the terms of the project. Depending on the approved project, debts may be deducted at certain rates, the remaining part is paid in installments and income increasing or expense reducing measures undertaken by the debtor (real estate sale, activity reduction, etc.) are implemented. If the debtor violates the payment plan or seriously harms the creditor's interests, the court may revoke the confirmation decision and declare the debtor bankrupt.
7. Rejection of the Concordat and Transition to the Bankruptcy Process The court may not approve the concordat project on the following grounds within the scope of Article 308 of the Bankruptcy Bankruptcy Code: Failure to ensure the majority of creditors in accordance with the procedure; the project is not found to be serious, feasible and credible; It is understood that the debtor is not acting in good faith; Some of the creditors clearly suffer losses compared to others; The debtor acts contrary to the concordat conditions during the respite period (such as missing assets). An appeal can be filed against the rejection decision, followed by an appeal within two weeks. In case of rejection of the concordat, if the debtor is a person or legal entity subject to bankruptcy, if the financial situation requires bankruptcy, or if one of the creditors has clearly requested bankruptcy, the court may decide ex officio bankruptcy. When a bankruptcy decision is made, all assets enter the liquidation process; The concordat process ending in bankruptcy also allows the liquidation - if deemed appropriate - to be carried out according to the ordinary liquidation procedure and through the hands of commissioners.
Concrete Application Scenario CASE SUMMARY FORM A medium-sized textile exporter company experienced a serious contraction in its cash flow due to the fluctuation in foreign exchange rates and the cancellation of orders by one of its main customers, and became unable to meet the due bank loan installments and supplier payments. The company management wants to restructure its debts before facing a bankruptcy request.
APPLICATION AND LEGAL PROCESS Küheylan Law Firm prepared a mixed concordat preliminary project based on the company's financial statements, creditor list and independent audit report and applied to the Commercial Court of First Instance where the company's headquarters is located. The court found the submitted documents sufficient and granted a 3-month temporary respite decision and appointed a commissioner. During the temporary respite, the liens on the company's bank accounts were lifted and the pressure on suppliers ended. Upon the positive preliminary report of the commissioner, the court decided on a definitive period of 1 year.
CONCLUSION The creditors gathered during the definitive deadline period accepted the project, which envisages the deletion of thirty percent of the debt and the payment of the remaining part within 18 months, with the majority required by law. With the finalization of the court's approval decision, enforcement proceedings were concluded according to the concordat plan and the company continued its activities uninterrupted.
8. Frequently Asked Questions Can my company's bank accounts be seized during the temporary period? No. With the temporary respite decision, new enforcement proceedings cannot be initiated against the debtor, existing proceedings are stopped and provisional attachment cannot be applied. However, some exceptional rules may apply for receivables secured by pledge; Therefore, an evaluation must be made according to the concrete situation.
Does the concordat application also include employee receivables? As a rule, labor receivables are in a privileged position during the concordat process and continue to be paid during the grace period. However, since the concrete impact of the process on labor receivables may vary depending on the nature and time of the receivable, it is recommended to make a separate legal evaluation on this issue.
What happens if creditors reject the project? If the qualified majority required by law (half of the creditors and the receivables or one-fourth of the creditors and two-thirds of the receivables) is not achieved, the project is deemed not accepted and the court rejects the concordat request. If the debtor is a merchant and the conditions are met, the court may decide ex officio bankruptcy at this stage.
Can I continue to manage the company during the concordat process? Yes, the debtor continues to retain control of the company; However, it is under the supervision of the commissioner and important disposition transactions (such as real estate sale, business pledge, surety) are subject to the approval of the commissioner. This limitation is intended to protect the interests of creditors.
Attention: Common Mistakes in the Process Presenting an inadequate or unrealistic project: Payment plans based on optimistic assumptions that are not supported by concrete financial data do not give confidence to the court and creditors and increase the risk of rejection. Delaying the application: In applications made after the cash shortage deepens and foreclosures and enforcement pressure intensifies, the grace period may not be sufficient and creditor confidence is damaged. Making savings without the approval of the commissioner: Significant asset transactions made without the permission of the commissioner during the grace period may lead to the termination of the concordat process and bankruptcy. Applying with missing documents: Incomplete or inconsistent submission of any of the documents listed in Article 286 of the EBL may cause the process to be delayed from the beginning or to be rejected outright.
Conclusion Concordat is a powerful restructuring tool that prevents bankruptcy for companies in financial difficulties, protects the creditor-debtor balance and is carried out under court supervision. Successful completion of the process; It depends on preparing a realistic payment plan on time, submitting the necessary documents completely, working in harmony with the commissioner during the temporary and definitive period, and negotiating correctly with creditors. With its command of the current legislation in the field of commercial and enforcement-bankruptcy law, Küheylan Law Firm offers comprehensive legal support to its clients, from the preparation of the concordat preliminary project to the court process and creditor negotiations.
Hunting. Mert Deniz Küheylan Important Legal Notice: The legal explanations in this guide have been prepared by Küheylan Law Firm for general information purposes and do not constitute legal advice. Since the unique conditions of each file may change the outcome, it is recommended to seek support from a commercial and enforcement law lawyer from the beginning of the process. Küheylan Law Firm — © 2026 All Rights Reserved.
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