Concordat (Konkordato) in Turkey: A Foreign Creditor's Guide to Moratoriums, Voting and Confirmation
When a Turkish debtor files for concordat, the foreign creditor's position changes overnight. Enforcement stops — not slows, stops — and the creditor moves from a collection posture to a voting one. The Turkish concordat regime was rebuilt in 2018 and the rules that matter to a creditor are concentrated in a handful of provisions of the Enforcement and Bankruptcy Law (EBL, İİK): the moratorium and its effects, the double-majority vote on the project, and the conditions on which a court will confirm it. This guide sets out those provisions as they currently stand and what each one means for a creditor sitting outside Türkiye.
1. What a Concordat Is, and Who Can Start One
A concordat is a court-supervised restructuring: the debtor proposes to pay creditors either over an extended period, or at a reduced amount, or both, and the court supervises the process. Article 285 of the EBL frames it around two triggers. Any debtor who cannot pay debts that have fallen due, or who is under the threat of being unable to pay on maturity, may request a concordat in order to pay by way of extension or reduction, or to avoid a probable bankruptcy.
The second paragraph of Article 285 is the one foreign creditors most often overlook: every creditor who would be entitled to file for bankruptcy may, by a reasoned petition, request that concordat proceedings be commenced against the debtor. The concordat is therefore not exclusively a debtor's instrument.
Jurisdiction is fixed: the competent and authorised court is the commercial court of first instance — at the place designated in the first or second paragraph of Article 154 for a debtor subject to bankruptcy, and at the debtor's domicile for a debtor not subject to bankruptcy. The applicant must deposit the concordat expense advance set out in the tariff issued by the Ministry of Justice; Articles 114 and 115 of the Code of Civil Procedure apply by analogy.
2. The Provisional Moratorium: Three Months and a Commissioner
Article 287 makes the first stage close to automatic. When the court establishes that the documents listed in Article 286 are complete, it grants a provisional moratorium immediately and takes every measure it considers necessary to preserve the debtor's assets.
Where the proceedings were requested by a creditor rather than the debtor, the provisional moratorium is granted if the debtor submits the Article 286 documents and records completely and within a reasonable period set by the court — and the cost of preparing them is borne by the requesting creditor. If they are not submitted in time and in full, no provisional moratorium is granted and the creditor's concordat request is itself rejected.
With the provisional moratorium the court appoints a provisional concordat commissioner to examine closely whether the concordat can succeed. Where the number of creditors and the size of the claims warrant it, three commissioners may be appointed; in that case one of them must be selected from among independent auditors authorised by the Public Oversight, Accounting and Auditing Standards Authority and operating in the province of the court.
The provisional moratorium is three months. Before that three-month period expires the court may, on the application of the debtor or of the provisional commissioner, extend it by up to two further months; where the debtor applies, the provisional commissioner's opinion is also taken. The total duration of the provisional moratorium may not exceed five months. The court decides on the definite moratorium before the provisional moratorium expires.
3. The Definite Moratorium: One Year and a Creditors' Committee
Under Article 289 the court decides on the definite moratorium within the provisional moratorium period. Before deciding it summons the debtor and, where the concordat was requested by a creditor, that creditor to a hearing. The provisional commissioner files a written report before the hearing and, if the court considers it necessary, attends to be heard. Importantly for creditors who have objected: the court expressly takes into account the objection grounds raised in objecting creditors' petitions.
If it is established that the concordat is capable of success, the debtor is granted a one-year definite moratorium. Unless circumstances require a fresh appointment, the provisional commissioner continues in office and the file is delivered to the commissioner.
Together with the definite moratorium decision — or at a suitable time within the moratorium — the court may also form a creditors' committee. The statute sets three constraints: not more than seven creditors, an odd number, and no fee is awarded to its members. For a foreign creditor with a substantial claim, a seat on this committee is the most direct route to information about how the process is actually running.
4. What the Moratorium Does to Your Claim
Article 294 is the provision that changes a creditor's position most sharply, and it is drafted in absolute terms.
No enforcement at all. During the moratorium no enforcement proceeding may be commenced against the debtor — including proceedings under Public Receivables Collection Law No. 6183 — and enforcement proceedings already commenced stop. Interim injunction and precautionary attachment decisions are not applied. Limitation periods and forfeiture periods that could be interrupted by an enforcement act do not run.
One exception. Privileged claims listed in the first rank of Article 206 may still be pursued by way of attachment.
Interest stops. Unless the confirmed concordat project provides otherwise, interest ceases to accrue on every claim not secured by a pledge from the date of the definite moratorium. A secured creditor is therefore in a materially different position from an unsecured one — and this is the single most important structural reason to know, before the moratorium, whether your claim carries security.
Set-off. Set-off is subject to Articles 200 and 201, and in applying them the date of announcement of the provisional moratorium is taken as the reference point.
| Claim type | Enforcement during moratorium | Interest after definite moratorium | Voting on the project |
|---|---|---|---|
| Unsecured commercial claim | Frozen (Art. 294/1) | Stops (Art. 294/3) | Votes |
| Claim secured by pledge | Enforcement by realisation of the pledge may start or continue (Art. 295); no preservation measures, no sale of the pledged asset | Continues to accrue | Votes to the extent affected |
| First-rank privileged claim (Art. 206/1) | Attachment still available (Art. 294/2) | Stops — not pledge-secured (Art. 294/3) | Excluded from the majority count (Art. 302) |
| Public receivable (Law 6183) | Frozen — expressly included | Stops if unsecured | Votes |
| Claim of the debtor's spouse or child, or of the mother, father or sibling of the debtor or of the spouse | Frozen | Stops if unsecured | Excluded from the majority count |
5. The Creditors' Meeting and the Double Majority
The commissioner chairs the creditors' meeting and reports on the debtor's position; the debtor is obliged to attend to give the necessary explanations. Article 302 then sets the acceptance threshold, and it is a double majority in the alternative. The project is deemed accepted if signed by a majority exceeding either:
- half of the registered creditors and half of the claims; or
- one quarter of the registered creditors and two thirds of the claims.
The second limb is what allows a comparatively small number of large creditors to carry a project — provided they still clear the quarter of registered creditors it requires by head count — and, conversely, what allows a well-organised block holding more than one third of the claims to close that route off. That alone is not a veto: the plan can still be carried under the first limb, which needs a majority exceeding half the registered creditors and half the claims. A creditor who wants to be able to stop a plan outright must be able to defeat both limbs, which in practice means holding at least half of the registered claims, or breaking the majority by head count. For a foreign creditor with a large exposure, the arithmetic of both limbs together is where the leverage sits.
Two exclusions apply to the count. Only creditors affected by the project may vote. And the creditors of first-rank privileged claims under Article 206, together with the debtor's spouse and children and — even where the marriage has ended — the mother, father and siblings of the debtor and of the spouse, are not taken into account in calculating either the creditor majority or the claim majority.
6. When the Court Will Confirm the Project
Acceptance by the creditors is necessary but not sufficient. Article 305 makes confirmation of a project accepted at the meeting and during the adherence period conditional on four requirements:
- Better than bankruptcy. In an ordinary concordat, it must be established that the amount offered will exceed what creditors would probably receive if the debtor went bankrupt. In a concordat by abandonment of assets, the proceeds of realisation or the amount offered by a third party must exceed what liquidation through bankruptcy would yield.
- Proportionate to resources. The amount offered must be proportionate to the debtor's resources; in this context the court also assesses whether, and to what extent, the debtor's expected rights are taken into account.
- Accepted with the Article 302 majority.
- Privileged claims secured. Payment in full of first-rank privileged claims under Article 206, and performance of debts contracted with the commissioner's permission during the moratorium, must be tied to sufficient security — unless the creditor expressly waives it.
The first condition is the one a dissenting creditor argues. It is a comparative exercise: what the project offers against the probable bankruptcy dividend. That comparison rests on valuation evidence, which is why the commissioner's reports and any independent audit in the file matter more than the rhetoric of the meeting.
7. If the Concordat Is Not Confirmed
Article 308 governs the failure case. If the concordat is not confirmed the court rejects the concordat request, and that decision is announced under Article 288 and notified to the relevant authorities.
The consequence that follows is the one creditors plan around: where the debtor is a person subject to bankruptcy and one of the grounds for direct bankruptcy exists, the court declares the debtor bankrupt of its own motion. No separate application is required.
Where the concordat process ends in bankruptcy, the court that issued the bankruptcy decision also decides whether liquidation proceeds by the simple or the ordinary procedure, and may direct that ordinary liquidation be carried out by the commissioners; in that case the duties and powers of the bankruptcy administration are exercised by the commissioners.
8. A Foreign Creditor's Sequence
- Establish whether your claim is secured. Article 294/3 stops interest on unsecured claims from the definite moratorium. This single fact determines the economics of waiting.
- Register the claim and check the classification. Whether the claim is treated as first-rank privileged under Article 206 decides both whether attachment remains available and whether you count towards the majority.
- Do the Article 302 arithmetic early. Model both limbs. A holding above one third of registered claims is a blocking position under the second limb.
- Object in writing before the definite moratorium. Article 289 requires the court to consider objection grounds raised in creditors' petitions when deciding on the definite moratorium.
- Seek a seat on the creditors' committee. Up to seven members, odd in number, unpaid — but it is the information channel.
- Build the comparative valuation case. Confirmation under Article 305(a) turns on whether the offer beats the probable bankruptcy dividend; that is an evidential argument, not a rhetorical one.
- Preserve set-off. Articles 200-201 apply with the provisional moratorium announcement date as the reference; a set-off position established after that date is treated differently.
The concordat is often described to foreign creditors as a loss of rights. It is more accurate to describe it as a change of forum: enforcement closes, and valuation and voting open. Creditors who reposition early — security, classification, majority arithmetic — generally do better than those who spend the moratorium contesting the freeze itself.
Frequently asked questions
Can a creditor start concordat proceedings against a Turkish debtor?
Yes. Under the second paragraph of EBL Article 285, every creditor entitled to file for bankruptcy may request, by reasoned petition, that concordat proceedings be commenced against the debtor. If the debtor then fails to submit the Article 286 documents completely and within the period set by the court, no provisional moratorium is granted and the request is rejected — and the cost of preparing those documents is borne by the requesting creditor.
How long does the moratorium last?
The provisional moratorium is three months (Art. 287). The court decides on the definite moratorium within that period, and where the concordat appears capable of success the debtor is granted a one-year definite moratorium (Art. 289).
Can I enforce a Turkish judgment during the moratorium?
No. Article 294 provides that during the moratorium no enforcement proceeding may be commenced against the debtor — expressly including proceedings under Public Receivables Law No. 6183 — that proceedings already commenced stop, and that interim injunction and precautionary attachment decisions are not applied. The single exception is that privileged claims in the first rank of Article 206 may still be pursued by attachment.
Does interest keep running on my claim?
Not if the claim is unsecured. Unless the confirmed project provides otherwise, interest stops accruing on every claim not secured by a pledge from the date of the definite moratorium (Art. 294/3). A claim secured by a pledge is in a materially different position, which is why establishing whether security exists is the first step.
What majority is needed to accept the project?
A double majority in the alternative under Article 302: signature by a majority exceeding either half of the registered creditors and half of the claims, or one quarter of the registered creditors and two thirds of the claims. Only creditors affected by the project vote, and first-rank privileged creditors under Article 206 as well as the debtor's close family are excluded from the calculation.
What happens if the court refuses to confirm the concordat?
Rejection is not the end of the file, and that is the part worth planning for. Because Article 308 lets the court declare bankruptcy of its own motion where the debtor is subject to bankruptcy and a direct-bankruptcy ground exists, a creditor can find itself in a bankruptcy estate without ever having applied for one. The practical consequence is that a creditor who has spent the whole moratorium building only a concordat strategy is unprepared on the day it fails. Before the confirmation hearing, have the claim documented to the standard a bankruptcy filing requires, and know whether your security survives into the estate — because the choice between simplified and ordinary liquidation, and whether the commissioners conduct it, is made by the same court on the same day.
