Introduction
How Many Months Does a Concordat Last? What are the Provisional and Definitive Grace Period Stages? This study has been prepared by examining the analysis responses of judicial decisions presented regarding the duration and stages of the concordat process. The examined decisions reveal that the concordat process, within the framework of the Enforcement and Bankruptcy Law (İİK), consists of three main stages: provisional grace period, definitive grace period, and approval proceedings, and that each stage has legally determined durations and extension possibilities. The study details these stages, their durations, and the flexibility in the process with excerpts from judicial decisions.
Judicial decisions consistently reveal the durations and stages of the concordat process. The process begins with the debtor’s application to the court and is carried out within specific grace periods (durations).
1. Provisional Grace Period Stage The first step of the concordat process is the provisional grace period granted by the court to the debtor. The existence of this stage is confirmed in all examined decisions.
Initial Period: The initial period for the temporary reprieve is three months. This is considered standard practice in many first instance court decisions: “It has been decided to grant a 3-month temporary reprieve to the company requesting concordat, starting from 03/10/2018” (First Instance-Istanbul 3rd Commercial Court-2018/878-2020/759-24.12.2020).
Extension Period: This three-month period can be extended by the court for a maximum of two additional months. This point has been clearly stated in a decision by the Supreme Court Civil General Assembly: “it can extend the temporary reprieve by a maximum of two more months, increasing the temporary reprieve period to five months.” (Supreme Court-Civil General Assembly-2023/486-2023/705-05.07.2023).
Total Period: Thus, the total duration of the temporary reprieve phase is a maximum of five months. This period being a legal limit was emphasized in a decision by the Istanbul Regional Court of Justice as follows: “as the temporary reprieve is legally five months, and its extension is not possible” (RCA-Istanbul Regional Court of Justice 17th Civil Chamber-2019/2024-2020/980-04.06.2020).
2. Definitive Reprieve Phase Following the temporary reprieve, if the concordat is deemed likely to succeed based on the concordat commissioner’s report, the definitive reprieve phase is entered.
Initial Period: The basic duration of the final grace period is one year. This period is a legal regulation and a rule frequently cited in decisions: “In Article 289/3 of the EBL, it is stated that a one-year final grace period will be granted if it is understood that the concordat can be successfully concluded.” (bam-İstanbul Regional Court of Justice 17th Civil Chamber-2019/2024-2020/980-04.06.2020).
Extension Period: In “special circumstances presenting difficulties”, upon the justified report and request of the commissioner, this one-year period can be extended for up to six months. The General Assembly of Civil Chambers of the Supreme Court explains this situation as follows: “In special circumstances presenting difficulties, the final grace period can be extended by the court for another six months upon the commissioner’s justified report explaining this situation and their request.” (Supreme Court-General Assembly of Civil Chambers-2023/239-2023/187-08.03.2023).
Total Period: In this case, the final grace period, including the extension, can reach a total of eighteen months.
3. Additional Period for Confirmation Proceedings As a rule, the court must render its decision regarding the confirmation of the concordat project within the final grace period. However, if it is understood that the proceedings cannot be completed within this period, an additional period is granted for the continuation of the protection provided by the grace period.
Additional Period: The court may decide to continue the provisions of the stay until a decision is made, and this additional period cannot exceed six months. This important detail is stated as follows in the decisions of the Supreme Court and the Regional Courts of Appeal, with reference to EBL art. 304: “If it is understood during the concordat proceedings that a decision cannot be rendered within the definitive stay period; the court, if deemed necessary, may continue the provisions of the stay until a decision is made, also by obtaining a reasoned report from the commissioner. This period cannot exceed six months.” (Supreme Court-General Assembly of Civil Chambers-2022/671-2022/1463-09.11.2022).
The reviewed decisions indicate that the concordat process is a legally defined and structured process, yet it also possesses flexibility. The stages and durations of the process can be summarized as follows:
Application and Provisional Stay: This period, starting at the debtor’s request and lasting a maximum of 5 months, aims to protect the debtor’s assets and conduct a preliminary examination.
Definitive Stay: In this main stage, granted upon the likelihood of the concordat’s success and lasting a maximum of 18 months, negotiations are conducted with creditors, and the concordat project is finalized.
Confirmation Proceedings: In this stage, which begins at the end of the definitive stay, the court examines the project from a legal perspective. If the proceedings are prolonged, the provisions of the stay protecting the debtor may be extended for up to an additional 6 months.
If all the durations of these three stages are utilized, the total period during which the debtor can benefit from concordat moratoriums reaches 29 months. This situation has been clearly calculated in a Regional Court of Justice decision: “The total moratorium period that the debtor company should benefit from, by utilizing all periods specified in the law, will be 29 months.” (bam-Istanbul Regional Court of Justice 17th Civil Chamber-2022/648-2022/740-09.06.2022).
It is also observed in decisions that additional suspension periods are added to these durations through legal regulations due to extraordinary circumstances such as the Covid-19 pandemic. This indicates that the process can also be flexible according to external factors.
An important distinction is that the moratorium periods and the payment period, which begins after the approval of the concordat project, are different. Moratoriums are legal protection periods granted for the preparation and approval of the project; whereas the payment period refers to the due date of the approved project. For example, in a decision, it was stated that “their ordinary receivables will be paid in equal installments within 60 months after a 12-month non-payment period, following the finalization of the concordat decision’s approval,” referring to the duration of the post-approval payment plan (bam-Istanbul Regional Court of Justice 45th Civil Chamber-2022/528-2022/477-20.04.2022). A suggested article.
Conclusion
As a result of the analysis of judicial decisions, it has been determined that the duration of the concordat is clearly regulated in the Enforcement and Bankruptcy Law and has a phased structure. The process includes:
Provisional Moratorium, which can last for a maximum of 5 months,
The Final Term, which can last a maximum of 18 months,
And the Approval Proceedings, for which an additional period of a maximum of 6 months can be granted if the proceedings are extended, comprise the stages.
Accordingly, the total maximum period a debtor can benefit from the protection provided by the concordat terms is 29 months. The extension of these periods is subject to objective conditions such as “special circumstances presenting difficulties” and the commissioner’s report, and the court also has discretionary power. This structure aims to provide the debtor with sufficient time to rectify their financial situation while also preventing the arbitrary extension of the process against creditors.
Why is Expert Concordat Lawyer Support Necessary?
The concordat process is a technical and multi-stage legal mechanism regulated by strict deadlines in the Enforcement and Bankruptcy Law. Elements such as the provisional term, final term, commissioner reports, creditor classes, approval proceedings, and the debt-receivable balance, each requiring separate expertise, can cause the process to be jeopardized even by a small error. For this reason, it is of vital importance that the concordat process, especially for companies operating in regions with high commercial volume such as Istanbul, Tuzla, Pendik, Kartal, Maltepe, Kadıköy, Ataşehir, Ümraniye, Gebze, and Dilovası, is managed by an expert concordat lawyer.
The flawless preparation of documents to be submitted in a concordat application, the legal reporting of financial analyses, effective communication with the commissioner, and the proper management of negotiation processes with creditors can only be ensured by a professional team. Otherwise;
Rejection of the moratorium request,
Negative assessment in the commissioner’s report,
Non-acceptance of the project at the confirmation phase,
Loss of control over company management
can lead to irreversible consequences.
Therefore, the concordat process must be carried out by a law firm specializing in commercial enterprise law, enforcement-bankruptcy practices, and concordat file management.
As 2M Hukuk Avukatlık Bürosu, with our Tuzla-based team, we offer professional and meticulous legal support in all processes, including the preparation of concordat applications, auditing of financial analyses, commissioner process management, conciliation with creditors, confirmation proceedings, and the creation of post-confirmation payment plans.
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