¹ Code of Enforcement and Bankruptcy, Law No. 2004.: R.G. [Official Gazette], 19 Sept. 1932, No. 2128, enacted: 19 June 1932 [hereinafter “CEB”].Google Scholar

² See CEB arts. 285–308 for “basic concordat” which is called as “composition” as well. Concordat is an enforcement institution that is adopted to protect the debtors who are in unavoidably bad financial states and to maintain equality between the creditors of such a debtor. A debtor in such a case makes an agreement with the majority of its creditors. According to this agreement, the nonprivileged creditors renounce a certain percentage of their claims. The debtor pays its debts with its current assets in the ratio accepted by the creditors and the remaining portion of its debts is discharged. According to this, concordat is such a compulsory agreement that the debtor makes with the majority which exceeds the absolute majority of its creditors and the two thirds majority of its claims. The nonprivileged creditors renounce a specific percentage of their claims and the debtor discharges from all of its debts by paying the percentage of them accepted in the agreement. The agreement takes effect with the confirmation of the Commercial Court. There are some types of concordat which are regulated in the CEB. See Baki Kuru, Ramazan Arslan, & Ejder Yilmaz, İcra ve İflas Hukuku 695–698 (2005).Google Scholar

³ See CEB art. 309 of the CEB for “concordat after bankruptcy.”Google Scholar

⁴ See CEB arts. 309/a-309/I “composition with the creditors for the transfer of assets.”Google Scholar

⁵ See CEB arts. 179-179/b for “adjournment of bankruptcy.”Google Scholar

⁶ See CEB arts. 309/m-309/ü for “restructuring.”Google Scholar

⁷ See CEB arts. 317-329/a for “extension of maturity in extraordinary circumstances.”Google Scholar

⁸ Law Amending the Execution and Bankruptcy Code, Law No.: 5092 R.G., 12 Feb. 2004, No. 25380, enacted 12 Feb. 2004.Google Scholar

⁹ Hereinafter “RR.”Google Scholar

¹⁰ Efe Dırenisa, Corporate Reorganization In Turkish Law Compared With The United States Chapter 11, 2 J. Yeditepe U. Fac. L. 166–168 (2005).Google Scholar

¹¹ The legal qualification of the restructuring institution is controversial in Turkish legal doctrine. According to the minority view, this way is a kind of concordat. According to the prevailing view, the restructuring institution is different from concordat in many ways. The most important difference is that while in concordat the basis is the restructuring of the debts of the debtor company, by taking precautions like changing the amounts of payment or maturities of the debts, these techniques can also be used in restructuring by conciliation as well, the main goal in restructuring is not the restructuring of the debts, but the restructuring of the firm, structurally and financially. See Sema Taşpinar Ayvaz, İcra-Iflıs Hukukunda Yeniden Yapilandirma 293 (2005); Hakan Pekcanitez, OǦuz Atalay, Meral Sungurtekin, & Muhammet Özekes, İcra Ve İflǎs Hukuku 431–432 (2007); Erol Ulusoy, Ticaret Hukuku Açısından Uzlaşma Yolu ile Borçların Yeniden Yapılandirlması, in İçin ArmaǦan 554 (Yavuz Alangoya ed., 2007).Google Scholar

¹² Baki Kuru, İcra Ve İflǎs Hukuku El Kitabi 1351 (2004); Taşpinar Ayvaz, supra note 11, at 303.Google Scholar

¹³ CEB art. 309/m/II.Google Scholar

¹⁴ CEB art. 309/r/I.Google Scholar

¹⁵ Alper Efe Erten, Mali Durumu Bozulan Sermaye Şirketlerinin Uzlaşma Yoluyla Yeniden Yapilandirilmasi 66–67 (2006).Google Scholar

¹⁶ Id. at 67.Google Scholar

¹⁷ Taşpinar Ayvaz, supra note 11, at 306.Google Scholar

¹⁸ Hülya Yarici, Sermaye Şirketleri Ve Kooperatiflerin Uzlaşma Yoluyla Yeniden Yapilandirilmasi 54 (2007).Google Scholar

¹⁹ Taşpinar Ayvaz, supra note 11, at 306. Compare Hakan Pekcanıitez, Yeniden Yapılandırma Projesinin Tasdiki ve Uygulanması, in: İcra ve İflas Kanundaki DeǦişiklikler Çerçevesinde Sermaye Şirketleri ve Kooperatiflerin Borçlarinin Yeniden Yapilandirilmasi Semineri 36 (2004).Google Scholar

²⁰ Yarici, supra note 18, at 55.Google Scholar

²¹ Id. at 55.Google Scholar

²² CEB art. 309/p/I.Google Scholar

²³ Taşpinar Ayvaz, supra note 11, at 307.Google Scholar

²⁴ Yarici, supra note 18, at 55.Google Scholar

²⁵ With the regulation of the CEB Article 309/n/II regarding Turkish Law, the institution of classification of claims is based on the institution of classification of claims in the American method of restructuring. Pursuant to the Bankruptcy Code [herinafter BC] § 1122, it is possible to put a claim into a specific category if the claims in the category are substantially similar to one another. Like the CEB, the BC also does not define the concept of “substantially similar.” See Erten, supra note 15, at 68. It can be generally said that in the American restructuring method, the similar rights are allowed to be classified into many categories on the condition that the classification is just. See Stefan Riesenfeld, Das amerikanische Sanierungsverfahren –Ein rechtsvergleichender Überblick, 1 Konkurs, Treuhand- und Schiedsgerichtswesen, at 94–95 (1983). American jurists understand “being just” usually as the sharing of the burdens and the benefits of the restructuring scheme between the creditors properly. See Axel Flessner, Sanierung und Reorganisation 94 (1982).Google Scholar

²⁶ Sümer Altay, KONKORDATO VE YENİDEN YAPILANDIRMA HUKUKU 1283 (2005).Google Scholar

²⁷ Taşpinar Ayvaz, supra note 11, at 308; Yarici, supra note 18, at 57.Google Scholar

²⁸ For example, secured creditors, unsecured creditors, and privileged creditors will constitute different categories. Moreover, if there is a difference between the securities, these secured claims may be classified between each other, too. See Abdulkadir Böke, Sermaye Şirketleri ve Kooperatiflerin Uzlaşma Yoluyla Yeniden Yapılandirlması, 1 J. Yeditepe Univ. Fac. L. 231 (2005). It is also accepted in American restructuring law that creditors with similar rights can be classified into different categories on the condition that the classification is rational and just. See Jay Lawrance Westbrook, Amerika Birleşik Devletleri'nde 11'inci Bölüm Yeniden Örgütlenme Usulü, in: Türk, İngiliz ve ABD Hukukunda İşletmelerin Ödeme GüçlüǦü Sorunlari ve Banka İlişkileri Sempozyumu 285 (Çev. Ali Cem Budak ed., 1993).Google Scholar

²⁹ Erten, supra note 15, at 71.Google Scholar

³⁰ CEB art. 309/p/I. If the court is convinced that the debtor has applied for restructuring in good faith, it decides to confirm, otherwise to reject the application not later than 30 days.Google Scholar

³¹ RR art. 18, subsection II.Google Scholar

³² Pursuant to the German Insolvency Code § 222(2), the classes should be formed justly. The criteria that will be used in classification should be indicated in the scheme.Google Scholar

³³ Erten, supra note 15, at 71.Google Scholar

³⁴ See Eberhard Braun & Wilhelm Uhlenbruck, Unternehmensinsolvenz: Grundlagen, Gestaltungsmöglichkeiten, Sanierung Mit Der Insolvezordnung 592–598 (1997).Google Scholar

³⁵ 11 U.S.C. § 1123(a)(4)Google Scholar

³⁶ The method of restructuring differs from concordat with this point. See OǦuz Atalay, Yeniden Yapılandırma Projesinin Tasdiki ve Uygulanması, in: İcra İflǎs Kanunundaki DeǦişiklikler Çerçevesinde Sermaye Şirketleri ve Kooperatiflerin Borçlarinin Yeniden Yapilandirilmasi 23 (2004).Google Scholar

³⁷ Erten, supra note 15, at 72.Google Scholar

³⁸ Ludwig Häsemeyer, Insolvenzrecht 764 (2007).Google Scholar

³⁹ Id. at 764; Dirk Herzig, Das Insolvenzplanverfahren 26 (2001).Google Scholar

⁴⁰ These are the minimum elements of the project, therefore it is possible to deal with matters other than these in the project. However, even if the project is approved, in accordance with CEB> Article 309(p) it must be examined during the confirmation hearing whether the project includes those matters or not. See Erten, supra note 15, at 75. It is commonly accepted in American law that the following matters should take place in the restructuring project: 1) Abatement in a certain rate in the amount of the debts, 2) the proposal of company's certificates of stock to the creditors in return of debts, 3) extension of maturity of debts or non-payment of some debts, 4) financial regulations made with creditors of loan. See Jay Lawrance Westbrook, ABD Şirket Kurtarma Usulü Kanunu-Şirketlerin “Going Concern” Olarak Alacakhlara Karşı Korunması, in: Türk, İngiliz ve ABD Hukukunda İşletmelerin Ödeme GüçlüǦü Sorunlari ve Banka İlişkileri Sempozyumu 19 (Çev. Ali Cem Budak ed., 1994). In American law in order to be confirmed, the restructuring scheme must pass the “best interest of creditors test,” unless the contrary is agreed unanimously. See Mustafa Özbek, Amerika Birleşik Devletleri iflas Hukuku Sisteminde Alacaklılara ve Borçlulara Ait Haklar, 12 Türkiye Barolar BirliǦi Dergisi 43 (2002).+Article+309(p)+it+must+be+examined+during+the+confirmation+hearing+whether+the+project+includes+those+matters+or+not.+See+Erten,+supra+note+15,+at+75.+It+is+commonly+accepted+in+American+law+that+the+following+matters+should+take+place+in+the+restructuring+project:+1)+Abatement+in+a+certain+rate+in+the+amount+of+the+debts,+2)+the+proposal+of+company's+certificates+of+stock+to+the+creditors+in+return+of+debts,+3)+extension+of+maturity+of+debts+or+non-payment+of+some+debts,+4)+financial+regulations+made+with+creditors+of+loan.+See+Jay+Lawrance+Westbrook,+ABD+Şirket+Kurtarma+Usulü+Kanunu-Şirketlerin+“Going+Concern”+Olarak+Alacakhlara+Karşı+Korunması,+in:+Türk,+İngiliz+ve+ABD+Hukukunda+İşletmelerin+Ödeme+GüçlüǦü+Sorunlari+ve+Banka+İlişkileri+Sempozyumu+19+(Çev.+Ali+Cem+Budak+ed.,+1994).+In+American+law+in+order+to+be+confirmed,+the+restructuring+scheme+must+pass+the+“best+interest+of+creditors+test,”+unless+the+contrary+is+agreed+unanimously.+See+Mustafa+Özbek,+Amerika+Birleşik+Devletleri+iflas+Hukuku+Sisteminde+Alacaklılara+ve+Borçlulara+Ait+Haklar,+12+Türkiye+Barolar+BirliǦi+Dergisi+43+(2002).>Google Scholar

⁴¹ In German law it is accepted that it is compulsory to show the criteria in the restructuring scheme which are used to classify the creditors with similar legal status. See Wilhelm Uhlenbruck, Insolvenzordnung Kommentar 2589 (2003).Google Scholar

⁴² Maintenance of the debtor company and its enterprise and to overcome the liquidity handicaps will be possible only by specific creditors renouncing some parts of their claims. See Herzig, supra note 39, at 81; Erten, supra note 15, at 75.Google Scholar

⁴³ Taşpinar Ayvaz, supra note 11, at 306.Google Scholar

⁴⁴ Erten, supra note 15, at 76.Google Scholar

⁴⁵ The restructuring scheme may contain financial and structural methods and precautions such as changes in financial and business structure, sale of assets, cancellation of debts, and so on. See Dırenisa, supra note, at 182; Article 309(n)(I/5) and Article 309(ö)(IV–V) of the CEB.Google Scholar

⁴⁶ Atalay, supra note 36, at 23–24; Yarici, supra note 18, at 53.Google Scholar

⁴⁷ Taşpinar Ayvaz, supra note 11, at 303.Google Scholar

⁴⁸ Id. at 307.Google Scholar

⁴⁹ Id. at 315.Google Scholar

⁵⁰ Altay, supra note 26, at 1285.Google Scholar

⁵¹ CEB art.309/p/II.Google Scholar

⁵² CEB art. 309/t/I; CEB Art. 309/p/II.Google Scholar

⁵³ Atlay, supra note 26, at 1285.Google Scholar

⁵⁴ Taşpinar Ayvaz, supra note 11, at 315.Google Scholar

⁵⁵ See CEB art. 309/n/I/5. See discussion infra, Part V “Precautions To Ensure The Feasibility Of The Scheme.”Google Scholar

⁵⁶ Erten, supra note 15, at 77.Google Scholar

⁵⁷ In the German insolvency method, the authority of representation of the debtor's assets and power of disposition on the debtor's assets is vested to the insolvency administrator as a rule. The German Insolvency Code acts from the thought that the debtor who could not avoid the state of insolvency is not the proper person to administrate the assets that are subject to its insolvency. However, in accordance with the German Insolvency Code §270, the debtor is allowed to represent and administrate its own assets under specific circumstances. See Erten, supra note 15, at 77 (n. 11). In this respect Turkish law is similar to American law, in which an insolvency administrator is not appointed as a rule. Yet in American law the debtor has the power of disposition and keeps his right to speak about the progress of the procedure. See Reinhard Bork, Der Insolvenzplan, 4 Zeitschrift für Zivilprozessrecht 480–481 (1996); U.S. Courts, Chapter 11: Reorganization Under the Bankruptcy Code, http://www.uscourts.gov/bankruptcycourts/bankruptcybasics/chapter11.html#debtor (last visited 24 Feb. 2010).Google Scholar

⁵⁸ But in American law, the procedure of reorganization does not affect the debtor's power of disposition. A debtor in possession can make any act of promise within the limits of the customary commercial activity and can dispose of the assets of the company. See Hanife DoǦrusöz, Amerikan Hukukunda Ödeme Güçlüğü İçindeki Şirketlerin Yeniden Yapılandırılması, 1 J. Yeditepe Univ. Fac. L. 216 (2005). However it has to obtain the court's allowance for the transactions other than customary commercial activity. See Ali Cem Budak, Amerika Birleşik Devletleri Hukukunda Şirket Kurtarma, in: Türk, İngiliz ve ABD Hukukunda İşletmelerin Ödeme GüçlüǦü Sorunlari ve Banka İlişkileri Sempozyumu 354 (1994).Google Scholar

⁵⁹ CEB art. 191.Google Scholar

⁶⁰ Erten, supra note 15, at 77; CEB arts. 287, 290.Google Scholar

⁶¹ Böke, supra note 28, at 238.Google Scholar

⁶² Taşpinar Ayvaz, supra note 11, at 315.Google Scholar

⁶³ The court, at the demand of the debtor or one of the creditors, immediately takes measures directed at the protection of the debtor's assets which it sees necessary with respect to the debtor's activities for the period until the final decision is rendered on the application.Google Scholar

⁶⁴ Yarici, supra note 18, at 59. In fact, according to the reorganization provisions of the American Bankruptcy Law, especially undue contracts and the contracts with perdurable performances are separated as profitable and unprofitable contracts from the debtor's perspective, and an action is defined according to this. In this way, by supporting the authority to benefit from profitable contracts and by invalidating the unprofitable contracts, the authority of bringing the debts arising from these contracts in the degree of an ordinary bankruptcy claim is given to the debtor. See Westbrook, supra note 28, at 279–283.Google Scholar

⁶⁵ Häsemeyer, supra note 38, at 790; Ayvaz, supra note 11, at 316; Erten, supra note 15, at 79.Google Scholar

⁶⁶ Altay, supra note 26, at 1286.Google Scholar

⁶⁷ Yarıcı, supra note 18, at 62.Google Scholar

⁶⁸ Taşpinar Ayvaz, supra note 11, at 316; Erten, supra note 15, at 79.Google Scholar

⁶⁹ Häsemeyer, supra note 38, at 790.Google Scholar

⁷⁰ Taşpinar Ayvaz, supra note 11, at 316; Erten, supra note 15, at 79.Google Scholar

⁷¹ Taşpinar Ayvaz, supra note 11, 317.Google Scholar

⁷² Erten, supra note 15, at 80 (n. 125).Google Scholar

⁷³ Id. at 81.Google Scholar

⁷⁴ Böke, supra note 28, at 229–230; Taşpinar Ayvaz, supra note 11, at 317.Google Scholar

⁷⁵ Ali Cem Budak, Ödeme Güçlügü İçindeki İşletmelerin Rehabilitasyonu ile İlgili Usullerin Amacı IşiǦında İcra ve İflas Kanunu'ndaki 5092 sayılı Kanun DeǦişikliǦi, in: İstanbul Barosu Meslek İçi EǦitim Seminerleri 8 (2004).Google Scholar

⁷⁶ Erten, supra note 15, at 81.Google Scholar

⁷⁷ Yarici, supra note 18, at 64; Taşpinar Ayvaz, supra note 11, at 318; Erten, supra note 15, at 82.Google Scholar

⁷⁸ Taşpinar Ayvaz, supra note 11, at 318; Erten, supra note 15, at 82.Google Scholar

⁷⁹ Altay, supra note 26, at 1285.Google Scholar

⁸⁰ CEB art. 309/t/I.Google Scholar

⁸¹ Taşpinar Ayvaz, supra note 11, at 315; Yarici, supra note 18, at 61.Google Scholar

⁸² Erten, supra note 15, at 82.Google Scholar