Istanbul Gelisim University Business and Social Security Law Lecturer Prof. Dr. Aydın Başbuğ, stated that each indebted person cannot make concordat claim and the capital companies and cooperatives have the priority on this matter.

Istanbul Gelisim University Business and Social Security Law Lecturer Prof. Dr. Aydın Başbuğ, stated that each indebted person cannot make concordat claim and the capital companies and cooperatives have the priority on this matter.

He continued: “In recent days, employers declare concordat, and this is a concern for creditors as well as employees. Creditors are protected through concordat. The indebted person who cannot pay dues in maturity date or who might not be able to make the payment can use this method in order to pay the debts by extra date or through discount and also in order to avoid bankruptcy.”

Basbug continued: “There is a risk of insolvency or bankruptcy, and some or all of the creditors bear the risk of never receiving their money back. Here, too, the creditors can give up a certain amount of their receivables and provide the indebted the chance to continue its presence and pay the debts.”
Explaining the opportunities offered by concordat, Prof. Dr. Basbug said: " Through debt restructuring, the financial status of indebted individuals will be fixed and they may avoid bankruptcy, and creditors may receive their money after a certain reduction or extended maturity, and it is recognized as an agreement that is binding on the parties to the approval of the court”.

“PROTECTION OF EMPLOYEE RIGHTS IS UNCERTAIN”

Prof. Dr. Basbug said: “Bankruptcy or concordat is closely related with the employees in a workplace. Turkish labor legislation protects the employees with partial regulations, foreseeing the foreclosure or bankruptcy. However, in case of concordat, it is not clear whether such guarantees will continue or not. Due to the debts of an employer against the third party, the foreclosure and enforcement proceedings to be carried out on the premises, materials, raw, semi-finished and fully-processed goods and other assets in the workplace are reserved to cover the claims receivable within the quarter preceding the execution decision of the employees in this workplace. And the remaining part will be subject to provision. However, it is uncertain whether this partial guarantee will be implemented in concordat or not.”

“THREE MONTHS SALARY OF EMPLOYEES WILL BE COVERED FROM SALARY GUARANTEE FUND”

Prof. Dr. Basbug stated that the only direct arrangement for the employees in case of concordat is the Law No. 4447 on Unemployment Insurance. He continued: "According to this law, in cases where the employer declares concordat, where a certificate of insolvency is received for employer, where the employer declares bankruptcy and where the employer has problems to pay salary, the three months salaries of employees which are unpaid are paid through Salary Guarantee Fund. This regulation has been included in our labor legislation as a result of the EU's enforcement.”