Concordat in Türkiye: A Creditor's Guide to Security, Voting and Recovery

A creditor usually learns about a concordat at the worst possible moment.

Invoices are already overdue. Enforcement may have begun. A supplier is deciding whether to stop deliveries. A lender is reviewing collateral. A landlord is considering termination. Management of the debtor is simultaneously asking its commercial counterparties to remain patient because the business is said to be viable.

The temporary respite changes the legal setting in which all of those decisions are made.

Turkish concordat under the Enforcement and Bankruptcy Law No. 2004 is not merely an agreement under which selected creditors accept a haircut or an extension of maturity. It is a court-supervised collective restructuring procedure. Enforcement against the debtor is substantially restricted; a commissioner supervises the process; claims are collected and examined; creditors vote under statutory majority rules; and, where the statutory requirements are satisfied, the commercial court may confirm a restructuring that binds creditors beyond those who voted in favour.

For the creditor, this means that ordinary collection strategy no longer provides a sufficient framework.

The relevant questions become more granular: whether the claim is secured; whether enforcement may continue even though sale is prohibited; whether a guarantee remains available; whether a continuing contract can be terminated; whether additional supply should be provided after the respite; whether the creditor has voting leverage; and, ultimately, whether the proposed concordat produces a better recovery than the realistic insolvency alternative.

Those issues should be analysed when the first respite order appears, not when the confirmation hearing is already approaching.

1. The temporary respite has immediate legal consequences

Where the court finds the statutory filing documents complete, it grants a temporary respite and appoints one or more temporary commissioners. The initial period is three months and may be extended, on the statutory conditions, by no more than two further months. The temporary respite produces the consequences of the definitive respite.

Publication of the temporary order is particularly important for creditors.

The announcement must state that creditors may, within a final seven-day period from publication, object with supporting evidence that the conditions for the respite do not exist and seek rejection of the concordat request. The Ministry of Justice's current concordat materials also confirm that the grant and extension of the temporary respite are not themselves subject to ordinary appeal.

That makes the objection period more significant than its short length might suggest.

A creditor considering an objection should not merely tell the court that the debtor owes substantial money. Financial distress is the reason concordat exists. The more relevant issues are whether the proposed restructuring has a credible financial basis, whether material assets or liabilities are missing, whether projected cash flows are realistic, whether the debtor still possesses a viable operating business and whether the proceeding appears capable of achieving a genuine restructuring rather than simply postponing enforcement.

For a large creditor, the initial respite file should therefore be reviewed promptly and analytically.

2. The enforcement stay is broad, but it is not a universal stay of legal proceedings

Article 294 prevents ordinary individual enforcement against the debtor during the respite. Proceedings already commenced are stayed; new proceedings generally cannot be initiated; precautionary attachment and interim attachment orders cannot be implemented; and periods capable of interruption through an enforcement act are suspended in the manner prescribed by the statute. The prohibition expressly includes public-receivable enforcement under Law No. 6183.

There are exceptions.

First-ranking privileged claims under Article 206 can continue to be pursued by attachment. Secured creditors are subject to the separate Article 295 regime discussed below.

The enforcement stay should also be distinguished from litigation concerning the underlying claim. The Ministry of Justice's concordat materials make clear that, as a general rule, the respite does not itself prevent new civil actions from being commenced against the debtor and does not automatically stay pending civil litigation, although bankruptcy proceedings require separate treatment.

That distinction can be important for a creditor whose claim is disputed.

The creditor may be prevented from executing against the debtor's assets during the respite while still needing to obtain a judgment establishing the existence or amount of the debt.

For international creditors, the same distinction should be considered before assuming that the Turkish restructuring removes the need to continue proceedings in the forum governing the substantive dispute.

Interest, set-off and future receivables

Article 294 contains several further consequences that are easily missed.

Unless the confirmed concordat provides otherwise, interest on unsecured claims stops running from the date of the definitive respite, not from the first day of the temporary period.

Set-off is not generally abolished. It remains subject to Articles 200 and 201, using publication of the temporary respite as the statutory reference date. A party that is both creditor and debtor of the company should therefore examine the set-off position before assuming that balances can be netted freely at a later stage.

The law also restricts pre-respite assignments of future receivables where the assigned receivable arises after the respite in the circumstances specified by Article 294. Non-monetary claims are ordinarily converted into an equivalent monetary claim for concordat purposes, subject to the debtor's ability, with commissioner approval, to assume actual performance.

3. Secured creditors remain powerful, but collateral does not place them outside the proceeding

A creditor holding collateral occupies a materially different position from an ordinary unsecured creditor.

During the respite, enforcement by way of realisation of pledged security may be commenced or continued. The ordinary rule, however, is that preservation measures cannot be taken through that proceeding and the secured asset cannot be sold while the respite remains in effect.

There is a statutory exception where continued retention of the asset serves little restructuring purpose. If the collateral is not expected to be used in the debtor's continuing business, is likely to lose value or is disproportionately expensive to preserve, the court may authorise its sale under the statutory procedure, with the secured creditor paid from the proceeds to the extent protected by the collateral value.

This is one area in which the current law needs to be read together with the Constitutional Court's 2024 decision.

The 2021 version of Article 297 required the court, before authorising specified transactions, to obtain the consent of the creditors' council in addition to the commissioner's view. In E.2024/10, K.2024/97, the Constitutional Court held that making the court's decision dependent on creditor-council consent impermissibly deprived the court of its own ability to balance the competing interests and annulled the relevant mandatory-consent element.

Accordingly, creditor-council participation should no longer be described as a veto over the court's permission.

Valuation affects voting as well as recovery

Under Article 298, the commissioner values secured assets. That value matters not only because it indicates the economic protection provided by the collateral, but because the secured creditor participates in ordinary concordat voting only for the unsecured deficiency remaining after the statutory valuation. The creditor or debtor may seek judicial revaluation within the statutory seven-day period, subject to the applicable cost rules.

A secured creditor should therefore not treat valuation as an accounting exercise.

The figure can affect both recovery and voting influence.

The Code also provides a separate mechanism under Article 308/h for restructuring secured debt where the debtor includes such a proposal in the preliminary project. That process uses its own statutory majority by secured-debt amount and should be analysed separately from the ordinary unsecured-creditor vote.

4. The debtor continues operating, but its freedom to dispose of assets is restricted

Concordat does not ordinarily displace the debtor's management in the same manner as a bankruptcy liquidation.

The debtor generally continues its business under the commissioner's supervision. The court can nevertheless require commissioner approval for specified transactions or, where appropriate, place operation of the business under the commissioner's control.

Article 297 separately restricts particularly significant dispositions.

During the respite, the debtor cannot, without court permission, create security, give guarantees, make gratuitous dispositions or carry out the specified transfers or encumbrances of important property. Transactions undertaken contrary to those restrictions are ineffective.

The position after the Constitutional Court's 2024 judgment is important for counterparties considering transactions with the debtor. The court's authorisation remains central; what has changed is that creditor-council consent can no longer operate as a mandatory condition depriving the court of its own discretion.

For a purchaser of a substantial asset, a new lender proposing security or a group company entering into an intra-group transaction, ordinary corporate authority is therefore not the only question.

The concordat restrictions may determine whether the transaction is effective at all.

5. Insolvency-trigger clauses in important contracts may not operate as drafted

Long-term commercial contracts often contain provisions stating that an insolvency filing, restructuring request or financial deterioration permits termination, acceleration or another default remedy.

Article 296 limits those provisions where the contract is important to continuation of the debtor's business.

A clause under which the debtor's concordat application itself amounts to breach, creates a termination right or accelerates the obligation cannot be relied upon in the manner prohibited by the statute. Even where no such express provision exists, an important continuing contract cannot be terminated solely because the debtor applied for concordat.

This is an ipso facto restriction.

It should not be read more broadly than the statute requires.

A counterparty may still possess termination rights based on independent defaults. Nor does Article 296 necessarily require indefinite performance regardless of new breaches or non-payment. The contractual and statutory grounds need to be separated.

The debtor also has a restructuring tool of its own. A continuing contractual relationship that has become excessively burdensome and obstructs the purpose of the concordat may, with the commissioner's favourable view and court approval, be terminated through the Article 296 mechanism. The resulting compensation claim then falls within the concordat treatment prescribed by the statute.

This can be particularly important for leases, long-term supply contracts, distribution agreements, licences and other contracts whose economics have deteriorated materially.

6. New money after the temporary respite is not legally equivalent to historical debt

One of the central practical problems in any restructuring is how a business that already owes substantial money can persuade banks and suppliers to continue financing it.

Article 308/c provides a deliberate answer.

Debts (including bank credit) incurred after the temporary respite with the commissioner's approval are not subject to the ordinary concordat terms. If the debtor defaults, such claims may be pursued during the respite and rank, under the statutory order, immediately after secured claims and before other claims. In a subsequent bankruptcy or asset-abandonment concordat they receive the treatment prescribed by Article 308/c. The same framework applies to counter-performance under continuing contracts where the debtor has accepted that performance with commissioner approval.

That priority was constitutionally challenged.

In E.2021/82, K.2022/167, the Constitutional Court rejected the application seeking annulment of the rule placing these commissioner-approved post-respite debts immediately after secured claims and ahead of other claims. The priority therefore remains part of the current statutory framework.

For a trade creditor, this creates an important separation between past and future exposure.

A supplier may have TRY 20 million of historical unsecured invoices that will participate in the concordat while new deliveries made with proper commissioner approval occupy a materially stronger legal position.

The supplier should nevertheless insist on clarity.

It should know whether commissioner approval has actually been given, what transactions the approval covers and how new invoices will be identified separately from historical balances.

Management's statement that "new invoices will be protected" is not enough.

7. Claim registration and voting require active creditor management

When the process reaches the claim-verification stage, the commissioner invites creditors to declare their claims.

Article 299 gives creditors 15 days from publication to do so. A copy of the announcement is also sent by post to creditors whose addresses are known, but the statutory period runs from the publication identified by the Code. Creditors who fail to declare their claims and whose claims do not appear in the debtor's balance sheet are excluded from the negotiations in the manner stated by Article 299.

A material creditor should therefore file deliberately even where management has informally acknowledged the debt.

The submission should make clear the contractual or other basis of the claim, principal amount, any claimed interest, security, judgments or awards, invoices and supporting account records.

The debtor is then invited to state its position and the commissioner examines the debtor's books and records. A claim that was commercially undisputed before the filing may therefore become formally disputed during the concordat.

Voting is not simple majority rule

Article 302 provides two alternative routes to acceptance.

The proposal is accepted where it is signed either by more than half of the recorded creditors representing more than half of the recorded claims, or by more than one-quarter of the recorded creditors representing more than two-thirds of the recorded claims.

Only creditors affected by the proposal vote. First-ranking privileged claims and the related-party creditors excluded by Article 302 do not count in the ordinary majority calculation. Secured creditors count only for their unsecured deficiency following collateral valuation. The court decides whether and to what extent disputed, conditional or indeterminate claims will participate in the calculation, without prejudicing the eventual merits of those claims.

The meeting itself is not the absolute end of the vote. Adhesions made during the following seven-day statutory period are also taken into account before the commissioner's final report is submitted.

For a large creditor, the important question is therefore not merely "what percentage haircut is being offered?"

It is also: who is in the denominator?

8. Creditor approval does not compel confirmation

A concordat that obtains the Article 302 majority still requires judicial confirmation.

Article 305 requires the court to examine, among other matters, whether the proposed ordinary-concordat recovery exceeds the likely recovery in bankruptcy, whether the amount offered is proportionate to the debtor's resources and whether the required statutory majority has in fact been achieved. First-ranking privileged claims and qualifying commissioner-approved debts must also receive the security required by Article 305 unless the relevant creditor expressly waives it.

This proportionality review is not theoretical.

The Ministry of Justice's current concordat training materials reproduce the Court of Cassation 6th Civil Chamber decision E.2023/1319, K.2023/1351, where the debtor's assets covered approximately 142 per cent of its debts, yet the confirmed proposal contemplated payment of principal without interest over 48 months. The Court of Cassation concluded that the statutory requirement that the offer be proportionate to the debtor's resources had not been satisfied and observed that concordat is not intended to become a route for obtaining inexpensive financing at creditors' expense.

That decision captures an important creditor point.

The relevant comparison is not simply whether the debtor can avoid bankruptcy.

The court must also examine whether the restructuring burden imposed on creditors is justified by the debtor's actual resources.

Objecting creditors who submit their objections in writing at least three days before the confirmation hearing can participate under Article 304.

9. Guarantees and co-obligors should be reviewed before the creditor votes

The respite generally protects the debtor, not every person connected with the debt.

The Ministry of Justice's materials confirm that the ordinary enforcement stay does not, as a rule, extend automatically to joint obligors or guarantors. Proceedings against them may therefore continue, subject to separate rules applicable to guarantees (including the limited judicial stay mechanism available to a surety under the Turkish Code of Obligations in the prescribed circumstances).

Article 303 then deals with the effect of the creditor's conduct in the concordat.

A creditor who does not consent to the concordat retains all rights against persons jointly liable for the debt. A creditor voting in favour can obtain the same protection only by following Article 303's prescribed procedure, which includes offering to assign its rights against the co-obligors against payment and notifying them of the creditors' meeting at least ten days in advance.

That is not a procedural detail to be considered after the vote.

If a parent guarantee, personal guarantee, aval, joint debtor or another recourse party represents a meaningful part of expected recovery, the creditor should review Article 303 before deciding how to vote.

A commercially attractive concordat proposal can become less attractive if voting for it is handled in a manner that compromises an otherwise valuable external recovery route.

10. Confirmation does not end creditor rights

The confirmed concordat generally becomes binding upon confirmation unless the approved plan provides that binding effect begins when the judgment becomes final. It applies to claims arising before the concordat request and to claims arising during the respite without commissioner approval.

Important claims remain outside that ordinary binding effect, including first-ranking Article 206 claims, the secured portion of collateralised claims and public receivables under Law No. 6183.

This produces an important distinction in relation to public claims: enforcement under Law No. 6183 is stayed during the respite, but those public claims are excluded from the ordinary binding effect of the confirmed concordat. The rules operate at different stages.

Appeal

Article 308/a gives the debtor or creditor that requested concordat ten days from service to appeal the confirmation decision. Other creditors who objected may appeal within ten days from publication of the confirmation decision; the regional appellate decision may itself be taken to the Court of Cassation within the statutory ten-day period.

Disputed claims

A creditor whose claim has been disputed must also watch Article 308/b.

The creditor has one month from publication of the confirmation decision to commence proceedings concerning the disputed claim. The confirming court may require the debtor to deposit the distribution attributable to that disputed claim with a designated bank pending resolution. A creditor that fails to commence the action within the statutory period cannot demand payment from that reserved amount in the manner provided by Article 308/b.

Non-performance after confirmation

Confirmation does not give the debtor permanent immunity if the plan is not performed.

Under Article 308/e, a creditor toward whom the debtor fails to perform the confirmed concordat may seek partial rescission of the concordat as against that creditor, while preserving the new rights acquired under the plan. The decision is subject to the statutory appeal periods.

Where the concordat was tainted by bad faith, Article 308/f allows any creditor to seek complete rescission of the concordat. If total rescission becomes final and the statutory conditions exist, the consequences can extend to bankruptcy of an insolvency-subject debtor.

These provisions matter because a creditor's strategy does not necessarily end with a disappointing confirmation judgment.

11. The restructuring should be evaluated against the creditor's realistic enforcement alternative

Creditors naturally measure a proposal against the face amount of their debt.

The law requires another comparison.

Article 305 asks whether the creditor is receiving more under the concordat than it would probably receive through bankruptcy.

For a commercially sophisticated creditor, the same comparison should be made internally.

What is the likely liquidation value of the debtor's assets?

How much is absorbed by secured claims and statutory priority claims?

How long would liquidation take?

Is the creditor secured in another jurisdiction?

Are guarantees collectible?

Does continued operation preserve enterprise value that would disappear in liquidation?

Will a key customer or supply relationship survive if the debtor continues?

Those questions do not require the creditor to accept an inadequate proposal.

They establish the correct economic baseline against which the proposal should be negotiated.

A creditor with valuable collateral, a strong guarantee, operational leverage or a large voting position may have considerable bargaining power. But that leverage is meaningful only if the recovery alternative is properly understood.

12. Cross-border creditors often need two strategies at the same time

For a foreign creditor, the substantive debt and the Turkish concordat may be governed by different legal systems.

A contract may be governed by English law.

A damages claim may be before an arbitral tribunal.

A judgment may already exist abroad.

A guarantee may have been issued by a group company elsewhere.

The Turkish concordat does not necessarily determine all of those underlying rights.

It does, however, determine how the creditor participates in the collective restructuring of the Turkish debtor and how recovery against assets within Türkiye is constrained.

The foreign creditor may therefore need to continue establishing the substantive debt while simultaneously filing the claim in the concordat, valuing Turkish collateral, protecting Article 303 rights against co-obligors and monitoring the voting and confirmation process.

Deadlines in the Turkish proceeding should not be assumed to wait for a foreign court or arbitral tribunal.

The recovery strategy has to coordinate both tracks.

13. Current reform proposals should not be confused with current law

Türkiye is in the middle of a substantial enforcement-law reform project.

The Ministry of Justice published a draft Cebrî İcra Kanunu (Enforcement Code) and invited public comments through 31 January 2026. The Ministry's subsequent official reporting continues to describe the text as a draft under development rather than enacted legislation.

The proposed code contains substantial changes to the organisation and wording of concordat rules, including claim registration and co-obligor provisions. Those proposals should not be silently substituted for the current Enforcement and Bankruptcy Law in an article addressing present creditor rights.

Accordingly, this briefing is based on Law No. 2004 as currently in force, together with the current effects of Constitutional Court decisions.

That distinction should continue to be checked at the date of any live matter while the wider reform process remains pending.

Conclusion

A Turkish concordat is not simply a moratorium followed by a creditor vote.

From the creditor's perspective, it is a sequence of legal decisions.

The temporary respite determines when ordinary enforcement stops and opens a short objection period. Article 294 changes the treatment of enforcement, interest and set-off. Articles 295 and 298 determine how security and collateral value affect the creditor's position. Article 296 can prevent the concordat filing itself from operating as a termination trigger in important continuing contracts. Article 308/c gives properly authorised post-respite financing and performance a fundamentally different priority from historical unsecured debt.

The process then moves from collection to participation.

Claims have to be declared. Disputed claims may affect voting. Secured deficiencies enter the ordinary majority calculation. Article 303 makes the creditor's vote potentially relevant to rights against guarantors and co-obligors. The court remains responsible for determining whether the statutory majority, liquidation comparison, proportionality and security requirements justify confirmation.

Even confirmation is not necessarily the end.

A disputed creditor faces a one-month litigation deadline. An objecting creditor may have appellate rights. A debtor that fails to perform the plan can face partial rescission; bad faith can support complete rescission.

The practical consequence is that a creditor should not treat concordat as a period in which nothing can be done.

The available actions have simply changed.

The quality of the eventual recovery will often depend on whether security, contractual rights, claims, guarantees and voting leverage were identified at the beginning of the process rather than reconstructed after the plan became binding.

How Terziolu & Partners Can Assist

Terziolu & Partners advises domestic and international lenders, trade creditors, suppliers, landlords, insurers, investors and corporate groups in Turkish restructuring, recovery and enforcement matters. Our work may include review of temporary and definitive respite orders; creditor objections; secured-creditor strategy and collateral valuation; enforcement and set-off analysis; claim registration; disputed claims; continuing-contract advice; commissioner-approved new supply and financing; guarantor and co-obligor strategy; creditor voting; objections to confirmation; appeals; post-confirmation litigation; partial or complete rescission of a failed concordat; and coordination of Turkish proceedings with foreign litigation, arbitration and asset-recovery measures, drawing on our dispute resolution, corporate and commercial, insurance and cross-border coordination practices.

For a significant creditor, the objective is not simply to monitor the concordat proceeding. It is to identify which parts of the recovery remain outside it, which rights must be exercised inside it and which decisions (particularly voting, continued supply and treatment of security) will affect recovery after the proceeding ends.

Discuss a concordat, creditor-recovery or restructuring matter with our team.

Selected authorities

Legislation

Enforcement and Bankruptcy Law No. 2004, particularly Articles 285 to 308/h, governing temporary and definitive respite, creditor effects, secured claims, continuing contracts, claim registration, voting, confirmation and post-confirmation remedies. The Ministry of Justice's current concordat materials reproduce and explain the operative statutory framework.

Law No. 7327 of 9 June 2021, which materially amended the treatment of secured assets, continuing contracts, debtor transactions and commissioner-approved post-respite financing.

Institutional guidance

Ministry of Justice, Concordat Commissioner Basic Training Book, Second Edition (2023). The Ministry publication addresses temporary respite, enforcement restrictions, secured claims, claim declaration, creditor voting, confirmation and creditor remedies, and is the principal institutional source used in this briefing.

Constitutional Court

Constitutional Court, E.2024/10, K.2024/97, 4 April 2024 (Official Gazette No. 32568, 6 June 2024). The Court annulled the statutory requirement making court permission for specified Article 297 transactions dependent on creditor-council consent, holding that the rule deprived the court of sufficient discretion to balance competing interests.

Constitutional Court, E.2021/82, K.2022/167, 29 December 2022. The Court rejected the challenge to the Article 308/c priority under which commissioner-approved debts incurred after the temporary respite rank immediately after secured claims and before other claims.

Court of Cassation

Court of Cassation, 6th Civil Chamber, E.2023/1319, K.2023/1351, 10 April 2023. The judgment, reproduced in the Ministry of Justice's 2023 concordat materials, emphasises that the requirement that the offer be proportionate to the debtor's resources must be applied substantively and that concordat should not operate as a means of obtaining inexpensive long-term credit from creditors.

Reform

Ministry of Justice, draft Cebrî İcra Kanunu. The proposed replacement code remains a draft reform project and should not be treated as current law.