1. Legal Framework
Foreign creditors can initiate debt recovery and insolvency proceedings in Turkey based on the following key laws:
- Enforcement and Bankruptcy Law No. 2004 (EBL)
- Turkish Commercial Code No. 6102 (TCC)
- Private International and Procedural Law No. 5718 (PIL)
- Regulations on Recognition and Enforcement of Foreign Court Judgments
- Bilateral Investment Treaties (BITs) and Double Taxation Agreements (DTAs)
2. Can Foreign Creditors Pursue Claims in Turkey?
Yes.
Foreign real or legal persons are allowed to pursue debt recovery proceedings in Turkey either directly or through an attorney.
📌 In practice, engaging a Turkish attorney is essential for initiating legal actions and enforcement.
3. Enforcement Proceedings (İcra Takibi)
A foreign creditor may initiate:
A) Non-Judicial Collection – General Procedure (EBL Art. 42 et seq.)
- Initiated with invoices, contracts, or other documents.
- The debtor has 7 days to object.
- If an objection is raised, the creditor must file a lawsuit for annulment of the objection.
B) Judicial Collection (Based on Court Judgment)
- If the creditor holds a foreign court judgment, it must be recognized and enforced in Turkey first.
- Once recognized, judicial enforcement can proceed.
C) Enforcement with Pledge
- If a pledge (movable or immovable) secures the debt, the creditor may initiate enforcement on the basis of that pledge.
4. Bankruptcy of Turkish Debtor Companies
If the debtor is a commercial entity and unable to pay, the following routes are available:
🔹 Direct Bankruptcy Petition (EBL Art. 154 et seq.)
- Creditors holding commercial receivables may file for bankruptcy directly.
- Upon finalization of enforcement, a bankruptcy lawsuit is filed.
🔹 Debtor’s Declaration of Insolvency
- If the company declares in writing that it is unable to pay, this may be used as grounds for bankruptcy.
🔹 Bankruptcy Judgment
- The Commercial Court of First Instance declares the bankruptcy.
- A bankruptcy estate (iflas masası) is formed.
- Creditors must file claims with the estate to be included in the liquidation process.
5. Filing Claims with the Bankruptcy Estate
Foreign creditors must submit their claims to the bankruptcy estate within 15 days of the official announcement of bankruptcy.
Required Documents:
- Invoices, contracts, or any valid documentation of the debt
- Notarized and sworn translations (into Turkish)
- If applicable, a recognized/enforced foreign judgment
⚠️ Failing to submit claims within the deadline may result in loss of rights in the distribution.
6. Recognition and Enforcement of Foreign Judgments
Any foreign court judgment (e.g., a compensation or debt judgment) must be:
- Recognized and enforced through the Turkish Civil Court of First Instance
- Once enforced, it can be used for judicial enforcement or bankruptcy proceedings
7. Case Study Example
Scenario: A tech company based in Germany provided services worth EUR 400,000 to a Turkish software company in Istanbul, but payment was never made.
Steps Taken:
- The creditor has the contract and invoices translated into Turkish.
- A Turkish lawyer initiates non-judicial enforcement in Istanbul.
- If the debtor does not object within 7 days, the enforcement becomes final.
- If still unpaid, the lawyer files a bankruptcy petition.
- Upon court order, bankruptcy is declared.
- The creditor registers its claim with the bankruptcy estate for potential recovery.
8. Legal Assessment and Conclusion
Foreign creditors have strong legal mechanisms under Turkish law to collect debts or seek bankruptcy of a Turkish company.
Key Considerations:
- All documentation must be in Turkish and duly certified
- Recognition/enforcement of foreign judgments can be time-consuming, so early action is advised
- Claims must be submitted on time to the bankruptcy estate
- Engage an experienced Turkish lawyer for representation
Prepared by:
Attorney Ferhat Küle
Istanbul Bar Association
Expert in International Debt Recovery & Commercial Insolvency Law
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