Concordat Preliminary Project in Türkiye: Preparation Checklist

The heart of a concordat application is the preliminary project. The court, the commissioner and creditors judge the company’s future largely by looking at this document.

A good project is not written as “I will pay my debts”. It shows, in figures, how, when and from which source they will be paid.

In this article we explain what the concordat preliminary project is and what to watch while preparing it, in the form of a checklist. For the general framework, see What Is Concordat in Türkiye?.

What Is the Concordat Preliminary Project?

The preliminary project is the plan that shows the debtor’s payment offer to creditors and the financial assumptions behind it. It is attached to the concordat request together with the other documents listed in the law (Turkish Enforcement and Bankruptcy Law, Art. 285 ff.).

The court decides on the moratorium largely by checking whether this project and the financial documents are consistent with each other.

Checklist: What Needs to Be Prepared?

1. Statement of financial position

• Current balance sheet and income statement
• Breakdown of assets and debts
• Information on pledges, mortgages and other security

The figures must match the accounting records exactly. An inconsistency is the first sign that damages the court’s confidence.

2. Creditor list

• Name, amount and maturity of every creditor
• Separation of bank, supplier, employee and public claims
• Secured and unsecured claims shown separately
• Status of claims that are in litigation or enforcement

Missing or wrong creditor information can cause problems later at the vote and at confirmation.

3. Cash flow forecast

This is the most critical part of the project. It must show that the business can generate enough cash in future to pay creditors.

• Revenue and cost assumptions
• Order and contract support
• Seasonality and collection delays
• Pessimistic and optimistic scenarios

4. Payment offer

• Payment rate offered to each group of creditors
• Maturity and instalment timetable
• The source from which each payment will be made

The offer should be understandably better for creditors than the bankruptcy scenario. Otherwise the project will not win the vote.

5. Improvement steps

How the ability to pay will increase must be shown concretely, for example cost reductions, sale of idle assets, new financing or changes to the operating structure.

Measurable steps are needed rather than general statements.

Common Mistakes

• Overly optimistic assumptions: revenue forecasts that are hard to achieve undermine the project’s credibility.
• Inconsistent figures: financial statements, the creditor list and the project must confirm each other.
• Misclassifying creditor groups: secured, privileged and ordinary claims are treated differently.
• Ignoring legal consequences: the effect of each financial step on the moratorium and on confirmation should be considered in advance.
• Starting too late: once attachments and bounced cheques begin, the time left for preparation shrinks.

Law and Finance Must Work Together

The preliminary project is both a legal document and a financial plan. A project prepared only from a legal standpoint but with weak financial grounding struggles to obtain a moratorium. An application made only of figures but not prepared according to procedure is equally risky.

We compare the options in Concordat or restructuring?. If you want to know what a lawyer does in the process, read Concordat Lawyer in Türkiye.

Conclusion

The concordat preliminary project is the most important document of the application, and preparing it takes time. Filing before your picture is clear can weaken the chance of a moratorium.

Our Concordat Advisory handles the preliminary project, financial analysis and the application together. If you would like to share your situation, write to us. The scope of the service is on our Concordat Advisory page.