What Is Concordat (Konkordato) in Türkiye? Conditions and Process

Payments are piling up, banks are cutting limits, suppliers want cash upfront. But orders are still coming in and the business still creates value.

For companies in this position in Türkiye, the first word that comes up is often concordat (konkordato). Used well, it is a powerful tool. Used at the wrong time or without preparation, it can make things harder.

This article explains what concordat is, who it suits and how the process works.

What Is Concordat?

Concordat is a debt restructuring procedure regulated in Article 285 and following of the Turkish Enforcement and Bankruptcy Law (İcra ve İflas Kanunu, İİK).

Under court supervision, the debtor presents a project to creditors showing how and when debts will be paid. If enough creditors accept it and the court confirms it, it generally becomes binding on creditors who did not join.

In short, the goal is for the company to keep operating and pay its debts, instead of going bankrupt.

Who Can Apply?

Any debtor who cannot pay debts that are due, or is at risk of not paying them on time.

Note: concordat is not only for companies that have already collapsed. A company that sees payment trouble coming can apply too. Companies that act early usually have better chances.

Creditors who could request the debtor’s bankruptcy may also request concordat.

What Documents Are Needed?

The application goes to the commercial court at the debtor’s domicile. The main documents are:

• Preliminary concordat project (konkordato ön projesi): the plan showing how and when debts will be paid
• Documents showing assets, liabilities and financial position
• A list of creditors and claim amounts
• A report from an independent audit firm assessing the project’s likelihood of success
• Other documents required by law

The court decides on the moratorium largely on the basis of these documents. Consistent figures and a realistic project are critical.

How Does the Process Work?

1. Temporary moratorium

If the documents are complete, the court immediately grants a three-month temporary moratorium (geçici mühlet) and appoints a temporary commissioner. It can be extended by up to two months.

The commissioner reviews the company and reports on whether concordat is likely to succeed.

2. Definitive moratorium

If success looks likely, the court grants a one-year definitive moratorium (kesin mühlet), extendable by up to six months.

During this period, the commissioner supervises the debtor’s activities. A creditors’ committee may be formed.

3. Creditors’ meeting and vote

Creditors vote on the project. One of the statutory majorities is needed: more than half of registered creditors and claim amounts, or more than a quarter of creditors together with more than two thirds of claim amounts.

4. Confirmation

If the court finds that the legal conditions are met, it confirms (tasdik) the project. It is then implemented and monitored.

What Does the Moratorium Give the Company?

As a rule, no new enforcement proceedings can be started against the debtor during the moratorium, and pending ones are suspended. This gives the company room to breathe and execute its plan.

But there are limits:

• Different rules apply to secured (pledged) claims.
• Significant transactions such as real estate transfers, pledges and guarantees need court permission.
• The company is managed under the commissioner’s supervision.

Is Concordat Right for Every Company?

No. Concordat is costly, public and closely supervised. For a company with few creditors, out-of-court Financial Restructuring is often faster and less damaging.

Answer these first:

• If the company keeps operating, can it generate enough cash to pay its debts?
• How much is owed to banks, suppliers and public authorities?
• Is a direct deal with creditors realistic?

We compare the two paths in detail in Concordat or restructuring?.

Conclusion

With a well-prepared project and a realistic cash flow plan, concordat can save a business. Success depends on preparation before the application.

With Concordat Advisory, we first assess together whether this path suits you. If you’d like to talk it through, write to us.