Debt Restructuring Transactions 27 March 2019
Due to the recent economic troubles in our country, many companies have suffered financial difficulties and have started to experience difficulties on paying their debts. This situation also negatively affects the flow of money and indirectly financial strength of the companies that are credited from aforesaid companies. Therefore, most cases in practice debt restructuring contracts/ exchange underwriting are signed and the maturities of the firms’ debts and collaterals received have been changed / renewed. Unfortunately, debt restructuring / installment transactions, which are mostly concluded without detailed information, cause companies to suffer greater losses.
Article 133 of the Turkish Code of Obligations states the following provision: “(1) Termination of an existing debt through a new debt shall only be possible with the explicit declaration of will to be made by the parties. (2) Particularly, an exchange underwriting made or a new bill receivable or a new surety bond issued for the existing debt shall not be deemed as novation unless the parties make an explicit declaration of novation.”
Pursuant to the relevant article, the issuance of a bill / check or the issuance of warranties and similar guarantees in order to install an existing debt shall not constitute a renewal of the debt unless explicitly regulated, correspondingly will not eliminate the previous debt. For this reason, if the parties have intent in this direction, this must be written in the relevant contract.
Similarly, in the event that an additional check / bill has been received for a receivable currently attached to a bill of exchange, such bills of exchange may be deemed to be issued as collateral and in this direction, as the bills will lose their bill of exchange quality, the ability to be collected through the proceedings of the bills of exchange can be eliminated. This situation, of course, will make the collection of these debts difficult.
Moreover, as the debt restructuring transactions will revise the maturities of the debts that have been previously made and claimable, the liability of the debtor in the legal proceedings to be initiated against the debtor who does not fulfill the structured debt will be controversial in terms of the maturity of debts. In this direction; in the context of the related restructuring process, the collectability of the existing debts may be adversely affected unless it is assessed and regulated in detail.
For all these reasons; it shall be appropriate to take these into consideration and to include provisions in this direction in related contracts and protocols during the restructuring of the current debts by changing their maturities and / or by binding them to the guarantee / bill of exchange.
Türkçe Versiyonu İçin
