Bankruptcy is a well-established recourse for addressing insolvency in Turkey, offering a structured approach to ensure the equitable satisfaction of creditors while protecting financially distressed debtors from potential exploitation.
In Turkey, the concept of bankruptcy applies to both personal and commercial debts, primarily targeting individuals and entities legally categorized as “merchants” or “tacir” under the Commercial Code. This includes any individual or legal entity engaged in commercial activities, even on a partial scale.
Bankruptcy proceedings in Turkey fall into two main categories: bankruptcy initiated with a proceeding (takipli iflas) and bankruptcy initiated directly without a proceeding (takipsiz iflas).
Creditors kickstart this process by submitting a bankruptcy request to the competent execution office corresponding to the debtor’s operational center, often its headquarters. Within three days of receiving the request, the execution office issues a payment order to the debtor.
Upon receiving the payment order, debtors have seven days to choose from three primary options:
a. Accept the claim and make the payment.
b. Lodge a complaint against the payment order before the execution courts, typically based on procedural irregularities, to halt the proceedings.
c. Object to the claim outlined in the payment order, with objections commonly contesting the validity or amount of the claim. A creditor may respond with a counter objection (itirazın kaldırılması) before the competent commercial court. The court’s acceptance of a counter objection confirms the validity of the claim and renders the order final and binding.