With the announcement of The Banks Association of Turkey (“TBB”) dated 14.10.2019, it is stated that a Restructure Framework Agreement has been issued in order to benefit the Financial Restructuring (“FR”) implementation for large scale companies that have a credit debt of at least TRY 25 million.
Purpose and Content of the Framework Agreement
The implementation of financial restructuring aims to ensure that companies having difficulty paying their debts can easily repay their debts and achieve economic growth by restructuring their debts with Turkish banks, factoring companies, leasing companies, and finance companies through framework agreements and contracts. For this purpose, companies within the scope of this application will be able to conclude individual contracts in accordance with the FR Framework Agreement.
- Required Criteria for The Large Scale Companies Covered By This Implementation:
- There shall not be any decree of bankruptcy given regarding to the company that will benefit from the Financial Restructure;
- According to the financial situation assessment made about the company that will benefit from FYY, a conviction should be formed that the company will gain the ability to repay. (The aforementioned evaluation shall be made by independent auditors, institutions with sufficient knowledge and expertise to be determined by creditor organisations that hold at least 2/3 of the total credit and at least two of the creditor organizations that have signed the Framework Agreement, or, if accepted by the debtor, the creditor organizations.)
Accordingly, companies that meet the restructuring requirements will be able to apply to one of the three highest creditor organizations that sign the Framework Agreement with an application and a letter of commitment in accordance with the format specified in the Annex to the Framework Agreement by adding additional documents necessary to ensure the restructuring.
Within 3 working days at the latest, in line with the declaration of the debtor, the creditor shall inform the creditor organizations which are among the parties to the Framework Agreement and shall demand to be notified about receivables and guarantees, if any, according to the calculation to be made in accordance with the method set out in the Framework Agreement. Creditor organizations shall make this feedback to the referenced creditor Organization within 3 business days following the notification to them.
If the referenced creditor institution believes that the application should be rejected directly by not continuing the FR process because the application is contrary to banking practices, it is malicious, contains conditions that cannot be accepted, etc.; it may request a voting in the presence of the Consortium of Creditor Organizations (“CCO”) by stating the reasons for rejection. With the vote of the creditors representing 2/3 of the total of the creditors of CCO and at least two of the creditors of CCO, the financial restructuring process can be rejected before it began. g.
Legal nature of the fFnancial Restructuring contract to be concluded:
This contract is subject to private law and does not invalidate any other agreements that the Creditor Entities have concluded with any Foreign Credit Institution or International Institution regarding the receivables subject to Financial Restructuring and which are valid as of the relevant date. The requirements of the convention are stated in the FR Framework Agreement.
Settlement of Disputes Arising From Financial Restructuring Contracts:
Any disputes arising from the failure of the creditors to fulfil their obligations arising from the Framework Agreement will be resolved by the Board of Directors of the Banks Association of Turkey.
Duration of Financial Restructuring Agreement
The Framework Agreement shall apply to Financial Restructuring Contracts to be signed by 19.07.2021.
Legal Outcome of The Conclusion Of Financial Restructuring Agreement
If the application of the company applying for financial restructuring is accepted, the creditor shall not be able to commence execution proceedings against the debtor for his / her receivables, continue execution proceedings against his / her current debt, open new proceedings and resort to other legal means. However, it should be stated that due to the statute of limitations and the lapse of time , the creditor organizations may take action concerning the cases that would lead to loss of rights. It should be stated that as a result of legal proceedings initiated by any creditor organization prior to the date of application, in case a judicial sale day is determined; or a lawsuit regarding the termination of tender is still on-going; or a commitment is given by the debtor regarding the debt; or a lawsuit regarding the action for annulment is still on-going, the aforementioned proceedings will not be affected by Financial Restructuring.
The relevant public announcement text can be found at the link below;
The full text of the framework agreement can be found at the link below;