Bankruptcy and Concordat Lawyer in Istanbul, Turkey

A bankruptcy lawyer in Turkey helps two groups. Companies and traders in financial difficulty need help choosing between bankruptcy (iflas) and concordat (konkordato). Creditors, Turkish or foreign, need to record their claims and protect their ranking. Both procedures fall under the Execution and Bankruptcy Law No. 2004 (İİK) and run before the commercial courts and the enforcement and bankruptcy offices. Deadlines are short.

Karanfiloglu Law Firm acts on both sides of these files from its office in Şişli, Istanbul: for Turkish companies trying to restructure, and for foreign suppliers and lenders left with unpaid claims against a Turkish counterparty. This page is general information; your own file needs a specific assessment.

When Do You Need a Bankruptcy Lawyer in Turkey?

You need a bankruptcy lawyer in Turkey when a business can no longer pay its debts as they fall due, or when you learn that a Turkish debtor has entered bankruptcy or concordat.

For a debtor the picture is familiar. Cash flow has broken down, banks are calling in loans and creditors have started enforcement proceedings. The usual options are an out-of-court arrangement, a court-supervised restructuring through concordat, or bankruptcy leading to liquidation. The right choice depends on the size of the debt, whether the business is still profitable and who the creditors are.

For a creditor, especially a foreign one, the problem usually starts with a public notice that the debtor has been granted a concordat moratorium or declared bankrupt. Short filing periods run from that notice. A claim not filed in time will, as a rule, struggle to share in any distribution.

Who Can Be Declared Bankrupt and Who Can Apply for Concordat?

Under Turkish law, bankruptcy proceedings can only be brought against persons subject to bankruptcy, while concordat is open to any debtor who cannot pay its debts or is at risk of not paying them, merchant or not.

Under Article 43 İİK, those subject to bankruptcy are, as a rule, merchants and persons treated as merchants. In practice this covers:

• Commercial companies such as joint stock companies (A.Ş.), limited liability companies (Ltd. Şti.), partnerships and cooperatives;
• Individuals who run a commercial enterprise in their own name;
• Special cases, such as commercial enterprises of foundations and associations, where merchant status needs a separate check.

Small tradespeople (esnaf), self-employed professionals and private individuals are generally not subject to bankruptcy. Creditors pursue them through ordinary attachment proceedings. They can, however, still apply for concordat.

How Bankruptcy Works in Turkey: The Main Routes

Bankruptcy in Turkey is requested either through enforcement proceedings or directly from the court without prior proceedings. The route depends on the claim and the debtor's situation. For a step-by-step account, see how to file for bankruptcy in Turkey.

General bankruptcy route

The creditor opens bankruptcy proceedings at the enforcement office, which serves a bankruptcy payment order. If the debtor neither pays nor objects in time, or objects and the creditor seeks to have the objection lifted, the creditor asks the commercial court for a bankruptcy decision. In practice the court first gives the debtor time to deposit the debt and costs. If no deposit is made, bankruptcy may be declared.

Route for negotiable instruments

A claim based on a cheque, promissory note or bill of exchange may use the special bankruptcy route for negotiable instruments. Time limits are shorter and the debtor's objections narrower. Check first that the instrument meets the Turkish formal requirements.

Direct bankruptcy

Article 177 İİK lists cases where a creditor may ask for bankruptcy without prior proceedings. They include a debtor with no known domicile, one who conceals assets or acts fraudulently against creditors, and one who has stopped making payments. The creditor must prove the ground with concrete evidence.

Debtor's own petition

Under Article 178 İİK, a debtor subject to bankruptcy may petition for its own bankruptcy by declaring insolvency. Where an interim balance sheet shows a capital company is over-indebted, the board must notify the court under Article 376 of the Turkish Commercial Code (TTK). Late notification can expose directors to personal liability. See also bankruptcy law and corporate restructuring in Turkey.

How the Concordat Process Works in Turkey

Concordat is a court-supervised procedure in which the debtor's restructuring plan binds all creditors once the required majority accepts it and the court approves it. It is regulated in Article 285 et seq. İİK. Since the 2018 reform abolished the postponement of bankruptcy (iflas erteleme), it is the main restructuring tool in Turkey.

1. Application: The debtor (or a creditor entitled to request its bankruptcy) applies to the commercial court at the debtor's domicile with a preliminary plan and the documents the law lists.
2. Temporary moratorium: If the file is complete, the court grants a temporary moratorium and appoints a temporary commissioner. As a rule it lasts three months and cannot exceed five months with extension.
3. Definitive moratorium: If the commissioner reports a reasonable prospect of success, the court grants a definitive moratorium, as a rule one year, with a limited further extension possible in complex cases.
4. Claims and creditors' meeting: The commissioner invites creditors by public notice to file claims. The plan is then voted on, and acceptance requires the legal majorities by number of creditors and by amount.
5. Court approval: The court checks the legal conditions, the creditors' common interest and the adequacy of security. Once approved, the concordat binds, as a rule, all creditors.

During the moratorium, as a rule no new enforcement can start against the debtor, pending proceedings are stayed and interim attachments are not enforced. Secured creditors may still proceed, but steps such as selling the collateral are restricted. The debtor cannot sell significant assets or grant security without the commissioner's consent. For the creditor's view, see concordat process and creditor rights.

What Creditors Can Do: Recording and Defending Your Claim

A creditor's first step is to file its claim, with evidence, within the period in the public notice. If the claim is then rejected or ranked wrongly, only a time-limited objection or lawsuit can fix it.

Recording a claim and objecting to the ranking table

After the bankruptcy decision, the bankruptcy office invites creditors to file claims, as a rule within one month of the notice. The administration then lists accepted and rejected claims in the ranking table (sıra cetveli). A creditor whose claim is rejected or wrongly ranked can, as a rule, sue before the commercial court within fifteen days of the table's announcement, to have its claim recorded or another claim removed. Our article on the case for recording a claim to the bankruptcy estate explains this lawsuit.

Filing claims in a concordat

In a concordat, claims go to the commissioner within the short period in the commissioner's notice. A disputed claim counts in the vote only as the court assesses it. Creditors may also object to approval and appeal, which matters when a plan treats creditors unequally or overstates the debtor's ability to pay.

Practical steps for foreign creditors

A foreign company does not need to travel to Turkey. A power of attorney to a Turkish lawyer, with an apostille or consular legalisation and a certified Turkish translation, is enough. Invoices and contracts are translated too. In some lawsuits a foreign claimant may be asked for security for costs, unless a treaty exempts it. Where assets seem to have been hidden before the insolvency, see the fraudulent bankruptcy case.

Our Bankruptcy and Concordat Services in Istanbul

Karanfiloglu Law Firm handles these files from the first assessment through to court representation.

For debtor companies and traders

• Assessing the financial position and comparing settlement, concordat and bankruptcy;
• Drafting the concordat petition and preliminary plan with the company's accountant and auditor;
• Representation before the commercial court through the moratorium and approval stages;
• Negotiating payment plans with creditors and banks;
• Advising the board on over-indebtedness duties under the TTK;
• Challenging pending enforcement proceedings and attachments.

For Turkish and foreign creditors

• Preparing claim filings to the bankruptcy estate and the concordat commissioner;
• Actions objecting to the ranking table;
• Representation at the creditors' meeting and vote;
• Reviewing the plan and objecting to its approval;
• Bankruptcy proceedings or a direct bankruptcy petition against a debtor;
• Following the file on UYAP, the courts' electronic system, and reporting to clients abroad.

These files often overlap with contracts, security and governance questions; see our commercial law page.

Documents Needed for a Concordat or Bankruptcy Filing

A concordat application is document-heavy, and an incomplete file can delay the moratorium. A company usually needs:

• A preliminary concordat plan showing how and when debts will be paid;
• Current balance sheet, income statement and interim financial statements;
• A list of assets and liabilities;
• A creditor list with names, addresses, amounts and any security;
• An independent audit firm's report on whether the plan is workable;
• Commercial books, tax and social security debt records, and a list of pending proceedings;
• Trade registry records, signature circular and the board resolution to apply.

Creditors usually need contracts, invoices, account statements, delivery records, any negotiable instruments and any pledge or mortgage documents. Court fees and audit costs change every year; court fees follow the annual tariffs under the Law on Fees (Harçlar Kanunu).

Which route fits your situation depends on the debt, the security involved and whether the business still earns income; a lawyer can assess it from your documents in a short consultation.

Common Mistakes in Turkish Bankruptcy and Concordat Files

Most losses in these files come from acting late or filing thin documents, not from difficult law. In our practice at Karanfiloglu Law Firm, the case we see most often is a company that only considers concordat after its accounts are attached.

• Applying too late. Once cash runs out, no income is left to support a plan. Review options as soon as payment problems appear.
• An unrealistic plan. The commissioner and court test the plan against real cash flow. Optimistic plans rarely reach the definitive moratorium.
• Unauthorised transactions. Transferring assets without the commissioner's consent can void the transaction and end the moratorium.
• Missing the filing period. Foreign creditors often see Turkish notices late. Monitoring a major Turkish customer reduces this risk.
• Thin evidence. Invoices without delivery records can lead to a disputed claim and a later lawsuit.

Whether you are a debtor or a creditor, the point of working with a bankruptcy lawyer in Turkey is to protect your deadlines and base decisions on documents. You can reach our Istanbul office through the contact page.

Frequently Asked Questions

What is the difference between bankruptcy and concordat in Turkey?

Concordat aims to keep the business running and restructure its debts, while bankruptcy liquidates the assets and distributes the proceeds to creditors. In a concordat the debtor keeps managing the business under the commissioner's supervision; in bankruptcy, the bankruptcy administration takes over.

How long does a concordat take in Turkey?

A concordat in Turkey usually consists of a temporary moratorium (up to five months in total) and a definitive moratorium (as a rule one year, with a limited extension if needed). Including approval and appeals, the process in practice usually takes between one and two years.

Can a foreign company file a claim in a Turkish bankruptcy or concordat?

Yes, foreign creditors file claims and vote under the same procedure as Turkish creditors. You do not need to travel to Turkey; a lawyer can act on an apostilled power of attorney with a certified Turkish translation.

Does a concordat moratorium stop enforcement proceedings?

Yes, during the moratorium no new enforcement proceedings can, as a rule, be started against the debtor and pending ones are stayed. Secured creditors may still start proceedings, but steps such as selling the collateral are restricted. Special rules for public receivables are checked separately.

How do I record my claim in a Turkish bankruptcy estate?

You record a claim by filing it in writing with the bankruptcy office, with supporting documents, within the period in the bankruptcy notice (as a rule one month). If it is rejected, you can, as a rule, bring an action objecting to the ranking table within fifteen days of its announcement.

Can an individual trader go bankrupt in Turkey?

Individuals who run a commercial enterprise in their own name are, as a rule, subject to bankruptcy. Small tradespeople and self-employed professionals usually are not, but they can still apply for concordat. Merchant status should be checked against the person's actual records.

Do I need a bankruptcy lawyer in Turkey to file?

Turkish law does not make representation by a lawyer mandatory for a bankruptcy or concordat filing. Given the preliminary plan, the document list and the short deadlines, working with a bankruptcy lawyer in Turkey reduces the risk of an incomplete file or a missed period.