Foreign Creditors in Turkish Concordat: How to Protect a Claim

Quick answer: A foreign creditor whose Turkish debtor enters concordat (konkordato) must act within the Turkish insolvency procedure rather than assume that an overseas invoice, judgment or pending lawsuit will automatically protect the claim. Under Article 299 of the Turkish Enforcement and Bankruptcy Law, creditors are invited to notify the concordat commissioners of their claims, with supporting documents, within 15 days from the relevant announcement. Creditors who do not notify their claims may be excluded from the negotiations unless the claim is recorded in the debtor’s balance sheet. If the debtor disputes the claim, separate rules apply to voting and later litigation. A foreign creditor should therefore monitor the official announcements, file a documented claim on time, verify how the claim is classified and valued, and preserve the right to challenge any disputed amount.

What Is Concordat in Turkey?

Concordat is a court-supervised restructuring procedure designed to allow a debtor in financial difficulty to propose a payment plan to creditors under the Enforcement and Bankruptcy Law. It is not the same as bankruptcy. During the concordat process the debtor may receive temporary and then definitive protection periods, commissioners supervise the financial situation, creditors are invited to declare their claims, and the proposed plan is eventually considered for approval.

For a foreign creditor, the most important practical point is that the proceeding takes place in Turkey under Turkish procedural rules even when the underlying contract, invoice or financing arrangement was negotiated abroad. A foreign supplier cannot safely assume that the debtor’s accounting records, prior emails or an overseas collection letter will substitute for the formal claim-notification step.

The 15-Day Claim Notification under Article 299

Article 299 is one of the central creditor-protection provisions. Once the commissioners issue the statutory invitation, creditors are asked to notify their claims within 15 days from the announcement. Current official concordat notices regularly state that the notice should be accompanied by documents showing the basis and amount of the claim, such as contracts, invoices, delivery records, account statements, checks, promissory notes, assignment documents and reconciliation records.

The deadline is short for an overseas creditor. Corporate approvals, apostilles, translations and courier delays can consume most of the period if preparation begins only after the notice is discovered. International companies that know a Turkish counterparty is in financial distress should therefore monitor official notices and maintain a ready evidence file.

What Happens If a Foreign Creditor Misses the Notification?

The statutory consequence is serious. A creditor that fails to notify the claim may not be admitted to the concordat negotiations unless the claim is already recorded in the debtor’s balance sheet or books in the manner recognized by the procedure. This can affect participation in the creditor process and the ability to influence the proposed restructuring.

Missing the 15-day notification should not be confused with automatic extinction of the underlying substantive debt. The legal consequences depend on the stage and status of the claim, but the creditor can lose important procedural advantages. That is why a foreign creditor should not treat the invitation as an optional administrative form.

What Documents Should a Foreign Creditor File?

The claim submission should demonstrate both the legal basis and the numerical amount. For a goods supplier this can include the sales contract, purchase orders, invoices, shipping records, customs documentation, delivery receipts, account statements and correspondence acknowledging the debt. For a lender, facility agreements, disbursement records, repayment schedules and interest calculations may be central. For a service provider, the contract, performance evidence, timesheets or acceptance records can matter.

Foreign-language documents may need Turkish translation. Corporate representation documents should also be in order. If a lawyer files the claim, a suitable power of attorney and proof of the foreign company’s authority chain may be required. International creditors should avoid sending a single invoice without the supporting transaction history if the debt is likely to be contested.

Foreign Currency Claims

Cross-border claims are often denominated in EUR, USD, GBP or another currency. Official concordat notices may require creditors to state the foreign-currency amount and, for voting or accounting purposes, provide a Turkish lira equivalent by reference to the date identified in the notice or procedural stage. The creditor should not improvise its own conversion date without reviewing the commissioner’s instructions and applicable law.

The calculation should separate principal, accrued interest, contractual penalties where legally enforceable, and other components. A transparent schedule is more persuasive than a single aggregate number. If the debtor’s temporary protection period affects interest accrual for the particular claim, that issue should also be analyzed.

What If the Debtor Disputes the Claim?

The debtor may accept the claim fully, accept only part of it or dispute it. A disputed claim creates a different procedural track. Under the concordat framework, the court may decide how much of a disputed claim is taken into account for voting purposes without finally deciding the substantive debt. The ultimate existence and amount of the claim can still require separate litigation.

Article 308/b specifically addresses disputed claims after confirmation. A creditor whose claim has been objected to may bring an action within one month from publication of the confirmation decision. The court that confirms the concordat may order the debtor to deposit the share corresponding to the disputed claim in a bank until the litigation is resolved. A creditor that does not commence the action within the statutory period cannot demand payment from that deposited share.

Recent appellate practice also emphasizes that missing the one-month Article 308/b period does not necessarily erase the underlying substantive claim; the procedural consequences concern participation and access to the reserved share. Because this distinction is technical, an overseas creditor should obtain case-specific advice rather than assume either that the debt disappears or that the deadline is unimportant.

Mandatory Mediation and a Disputed Commercial Claim

If the creditor must file a separate Turkish commercial action concerning a monetary claim, mandatory mediation may become relevant under Article 5/A of the Turkish Commercial Code. Appellate decisions have treated Article 308/b commercial monetary claims as subject to the mediation condition in circumstances falling within the statutory scope. This creates a timing trap: a creditor facing the one-month period after concordat confirmation should evaluate mediation immediately rather than waiting until the end of the month.

Does a Foreign Judgment Automatically Register the Claim?

No. Holding a foreign court judgment does not mean the Turkish concordat commissioners will automatically treat the foreign decision as directly enforceable. A foreign judgment may require recognition or enforcement in Turkey under Law No. 5718 before it can have the desired Turkish legal effect. Even so, the judgment is important evidence and should be included in the claim file together with proof of finality and relevant translations.

The creditor should distinguish between registering a claim in concordat and enforcing a foreign judgment. They serve different purposes and can proceed on different procedural tracks. If the debtor’s restructuring is already underway, waiting for a separate enforcement case to finish before notifying the commissioners can be dangerous because the Article 299 period is much shorter.

What If the Creditor Already Started Enforcement Proceedings?

Concordat protection can affect ongoing enforcement measures against the debtor. The effect depends on the nature of the claim and stage of the restructuring. A foreign creditor should therefore immediately review existing Turkish enforcement files, attachments and interim measures when a concordat decision is announced.

The broader debt-recovery strategy remains relevant. Our guide on recovering unpaid invoices from Turkish companies explains ordinary recovery tools, while the concordat procedure changes the landscape once court-supervised restructuring protection begins.

Can a Foreign Creditor Vote on the Concordat Project?

Voting rights depend on whether and to what extent the claim is admitted for the concordat calculation. A properly notified and accepted claim is generally positioned to participate. Disputed claims can be treated specially for voting purposes by the court. Secured, privileged and other categories may have different treatment under the statute.

Foreign creditors should not focus only on the percentage offered by the plan. Payment timing, currency treatment, security, guarantees, related-party claims, disputed amounts and the debtor’s projected cash flow all affect the commercial value of the proposal.

Common Mistakes by Overseas Creditors

The first mistake is learning about the concordat too late because no one monitors Turkish official notices. The second is submitting only an invoice without the underlying contract and performance evidence. The third is failing to calculate the deadline from the correct announcement. The fourth is not checking whether the debtor disputed all or part of the claim.

Other errors include using an unauthorized corporate signatory, failing to translate key records, assuming that a foreign lawsuit automatically reserves rights in the Turkish process, and missing the one-month litigation step for disputed claims after confirmation.

Frequently Asked Questions

How long does a foreign creditor have to register a concordat claim?

Article 299 provides a 15-day notification period from the relevant announcement. The specific notice should be read carefully because it identifies the filing method and supporting-document requirements.

Can the claim be filed in English?

Foreign documents can be evidence, but Turkish translations may be required for effective use before commissioners and courts. Translation should be prepared early.

What if the debt appears in the Turkish company’s books?

Article 299 recognizes an exception for claims reflected in the debtor’s balance sheet or books, but relying on the exception instead of making a timely filing is risky unless the accounting position is verified.

Can a foreign creditor use a lawyer without travelling to Turkey?

Usually yes, with an appropriately executed and legalized power of attorney and corporate authority documentation.

What if the debtor disputes the invoice?

The claim may become a disputed claim. Voting treatment and later litigation under Article 308/b then require separate analysis.

Is there a one-month deadline after concordat confirmation?

For creditors whose claims have been disputed, Article 308/b provides a one-month period from publication of the confirmation decision to bring the specified action for purposes of the reserved concordat share.

Does a foreign judgment guarantee payment?

No. Recognition or enforcement issues may still arise, and concordat can restructure the Turkish debtor’s payment obligations.

Can the creditor continue ordinary enforcement during concordat?

The moratorium can restrict enforcement. The effect depends on the claim and procedural stage and should be reviewed immediately.

Conclusion

Foreign creditors can protect substantial claims in a Turkish concordat, but the procedure rewards speed and documentary preparation. The 15-day Article 299 notification window, the debtor’s acceptance or objection, voting treatment and the one-month Article 308/b step for disputed claims can all materially affect recovery.

International companies dealing with a distressed Turkish counterparty should monitor official notices, prepare evidence and translations before deadlines become urgent, and coordinate concordat strategy with any existing enforcement, arbitration or foreign judgment proceedings.

This article provides general information and is not a substitute for legal advice on a specific concordat file.