Rights of Creditors in Companies Declaring Concordat

In today’s volatile economic environment, many companies are facing financial difficulties and becoming unable to pay their debts. One of the most common legal remedies used by such companies in Turkey is declaring concordat. But what happens to creditors when a company files for concordat? What rights do they retain, and how can they protect their claims?

What Is a Concordat?

Concordat is a legal restructuring process that allows a debtor company to avoid bankruptcy by reaching a debt repayment agreement with its creditors under the supervision of a court. During this period, the company is protected from enforcement proceedings and is given a chance to recover.

How Does Concordat Affect Creditors?

Although a concordat grants temporary relief to the debtor, Turkish law also includes various provisions to safeguard the interests of creditors:

1. Suspension of Proceedings (Article 294 of the Enforcement and Bankruptcy Law):

Once a temporary respite is granted, all enforcement proceedings against the debtor are suspended, and no new proceedings can be initiated.

2. Right to File a Claim:

Creditors must notify the concordat commissioner of their receivables within the deadline set by the court. Failure to do so may result in exclusion from the payment plan.

3. Classification of Claims:

The commissioner classifies claims based on their nature. Secured (e.g., pledged) and unsecured creditors are treated differently in the repayment hierarchy.

4. Voting on the Concordat Plan:

Creditors have the right to vote on the proposed concordat plan. The plan becomes binding only if certain majority thresholds are met.

5. Right to Object:

Creditors may object to the validity of the concordat plan, the inclusion or exclusion of debts, the accuracy of financial statements, or procedural irregularities. This step often requires expert legal intervention.

Services Offered by Özocak & Altun Law Firm

The concordat process is legally complex and requires strict compliance with deadlines and procedural rules. Özocak & Altun Law Firm provides expert legal services to ensure that creditors' rights are effectively protected throughout the process:

✅ Debt Registration and Notification:

We assist creditors in submitting and registering their claims accurately and on time to the concordat commissioner.

✅ Review of the Concordat File and Objections:

Our lawyers analyze the financial documents, payment plan, and the proposed concordat project, and initiate legal objections where necessary.

✅ Representation at the Creditors’ Meeting:

We represent our clients during the creditors’ meeting and exercise their voting rights regarding the approval or rejection of the concordat plan.

✅ Protection of Secured Creditors’ Rights:

For creditors holding collateral or pledges, we ensure the legal protection of their rights through asset liquidation or enforcement mechanisms.

✅ Post-Concordat Collection and Enforcement:

After the concordat period, we initiate or resume enforcement proceedings to recover the outstanding debts.

Conclusion

The concordat process, while designed to help struggling companies, may pose serious risks for creditors. Timely and professional legal support is essential to prevent the loss of claims and secure recovery. Özocak & Altun Law Firm is committed to protecting creditors' interests with strategic and dedicated legal services throughout the entire concordat process.

If you are a creditor affected by a concordat and wish to secure your rights, feel free to contact our firm for professional assistance.