Latest Amendments To The Debt Enforcement And Bankruptcy Law, Introduced With The Law No.6352

June 14, 2013

The Debt Enforcement and Bankruptcy Law, that was amended by the "Law on the Effect and Enforcement of the Turkish Commercial Code No.6103" published in the Official Gazette dated 14.02.2011 No.27846 and put into effect as of 1.7.2012, was given a new look by the Turkish Code of Obligations that was put into effect as of he same date, and was finalized with the first thirty eight articles of the Law No.6352. Two general provisions were issued on the effecting of the amendments made by the Law No.6352 on the Debt Enforcement and Bankruptcy Law; Article 106 and the Provisional Article 10. The amended provisions can be generally categorized as follows, based on their effective dates:

 

Amendments effective as of July 5th 2012 are as follows:

− rearrangement of the organization of debt enforcement offices

− all decisions of a debt enforcement officer being reasoned

− cases in an enforcement court being urgent in nature

− enforcement proceedings without judgment being prohibited against foreign states

− warnings with enforcement order in enforcement proceedings with judgment against foreign states

− enforcement indemnifications being reduced to an aggregate 20%, the indemnification covering the accessories of the receivables

− non-seizure of the student scholarships and household goods

− Non-practicability of protective measures in cases where third parties claim ownership or other rights in kind on the seized goods or accept receivership

− in cases where the attachment is released since the creditor did not duly request sale, the creditor being liable for the expenses related to the relevant goods

− discretionary power of the enforcement officer...

 

Amendments effective as of January 5th 2013 are as follows:

− electronic procedures being available

− payment by the debtor to the bank account of the enforcement office, payment by the enforcement office to the bank account of the creditor

− notification of the notice of levy to the registered office of the third party

− shortening of sale request periods

− sale of movables within 2 months

− electronic sales announcements and electronic bidding for auctions being possible for movables and immovables

− sale of immovables within 3 months

− opening of the first and second auctions in immovable sales at the highest bid, and both auctions being based on 50% of the estimated value

− except for apartment flats, deposit of the collected amounts to the bank about by the end of the working hours on the business day following the day of collection...

 

As seen above, the Law No.6352 includes amendment provisions that introduce non-negligible modifications in almost every aspect of the Debt Enforcement and Bankruptcy Law. First of all, it requires that all decisions of the enforcement officer being reasoned in any phase of the proceedings. Actions otherwise would be a matter of plaint as per Art.16 of the Law. On the other hand, the provision requiring compulsory execution for the goods belonging to the debtor state in enforcement proceedings with judgment against foreign states is effective as of July 5th 2012, and for all warnings regarding enforcement order issued after such date, enforcement proceedings without judgment is strictly prohibited against foreign states. The "Non-Seizure" concept defined in Article 82 of the Debt Enforcement and Bankruptcy Law will also include any goods needed by the debtors whose economic activity is depended on physical labor rather than capital, and student scholarships. In addition, "essential household goods" are also excluded from the context of seizure. Creditors who failed to request sale of goods within the legal time period or who failed to deposit the expenses required as per the decision of the enforcement officer within fifteen days or who failed to withdraw his/her request and renew such request within the legal time period, will become liable for all related expenses (such as seizure and protection expenses) as of July 5th 2012, if he/she causes the release of attachment because of the aforementioned actions. One of the greatest innovations introduced by Article 8a of the Law No.6352 is related to the transactions that can be made electronically. Such regulation allows for electronic auction announcements and bids. Moreover, electronic follow-up requests over the National Judiciary Informatics System (UYAP) are possible as of January 5th 2013. Surely, no new follow-up requests or payment orders will be required at the completion of a proceeding, if such proceeding is initiated before January 5th 2013 and the follow-up request and the payment order is filled out in accordance with the previous regulation. Payment request periods are reduced to half. Such periods are reduced to 6 months from 1 year for movables and receivables, and to 1 year from 2 years for immovables. The Law introduces a new general regulation that fixes the enforcement indemnity amounts to a rate of 20%. Again, as of January 5 th 2013, complementary auction is no longer required for movables, and the sale is canceled if the auction amount is not paid in the first auction. In summary, the Law No.6352 introduces comprehensive changes covering creditors, debtors and third parties. Such provisions include significant new aspects especially on loan contracts, that must be clearly understood, and take their place in our law practice as supplementary components.

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