Introduction

How Can Labor Claims Be Collected from a Company Declaring Concordat? This study presents an analysis of court decisions regarding how labor claims can be collected from a company undergoing concordat proceedings. The collection process, shaped within the framework of the Execution and Bankruptcy Law (EBL) provisions, varies according to different scenarios such as whether the concordat is approved, the approved project is implemented, or the process results in bankruptcy. The study examines these scenarios in light of Supreme Court, Regional Court of Justice, and Court of First Instance decisions, detailing the available legal avenues for labor creditors and their functioning.

As a result of examining judicial decisions, the main findings regarding the collection of labor claims are as follows:

Privileged Claim Status: Labor claims are considered first-priority privileged claims according to EBL Article 206/1. This status provides special protection for claims during the concordat process.

Payment or Collateral as a Condition for Approval: For the concordat project to be approved by the court, the full payment of privileged labor claims or securing them with sufficient collateral, unless the creditor explicitly waives them, is mandatory (EPL Art. 305/1-d). Failure to meet this condition is a sufficient reason alone for the rejection of the concordat request.

Rejection of Concordat and Bankruptcy: The company’s inability to pay its labor claims or secure them is considered strong evidence that the project cannot succeed and usually results in the concordat request being rejected and the company’s bankruptcy being declared. In this case, claims are collected preferentially from the bankruptcy estate.

Non-compliance with the Approved Project: If, after the concordat is approved, the company fails to comply with the payment plan within the scope of the project, the creditor employee has the right to terminate the concordat for themselves, in accordance with Article 308/e of the EPL. With the termination decision, the creditor is freed from the restrictions imposed by the concordat project and regains the right to initiate enforcement proceedings for the full amount of their claim.

Disputed Claims: Labor claims disputed by the debtor company become “disputed claims.” In this case, the creditor can include their claim in the concordat project by filing a lawsuit for the determination of their claim within one month from the announcement of the approval decision, in accordance with Article 308/b of the EPL.

A. Collection During the Concordat Process and Approval Stage

The privileged nature of labor claims provides the most significant protection during the confirmation stage. This situation was clearly stated in a decision by the 6th Civil Chamber of the Court of Cassation: “since the creditor … asserted that their claim was a labor claim based on a labor court decision, the court should examine whether there is a privileged creditor as specified in Article 206 of the Enforcement and Bankruptcy Law, and take action regarding privileged claims in accordance with Article 305/1-d of the Enforcement and Bankruptcy Law” (Court of Cassation 6th Civil Chamber, 2024/390 E., 2024/895 K.).

In practice, courts meticulously apply this rule. For example, the İzmir 1st Civil Court of Commerce directly rejected the concordat request because the privileged labor claims were tnot secured by collateral (2024/435 E., 2025/581 K.). The Karşıyaka Civil Court of Commerce, on the other hand, found it sufficient for the company to provide a lathe machine as collateral for the remaining labor claim and issued a confirmation decision (2021/143 E., 2021/222 K.). In many decisions, it is observed that companies proved they had fully paid their labor debts with receipts before confirmation (İzmir 1st Civil Court of Commerce, 2021/314 E., 2021/498 K.; Kayseri 1st Civil Court of Commerce, 2020/609 E., 2022/177 K.).

Furthermore, attachments placed for privileged claims do not fall with the confirmation of concordat. This exception was ruled in the decision of the Bakırköy 1st Civil Court of Commerce as, “that attachments made in enforcement proceedings initiated before the temporary respite decision and not yet converted into cash (with the exception of attachments made for privileged creditors… under Article 206/1) shall FALL”  (2018/426 E., 2020/447 K.).

B. Collection in Case of Rejection of the Request for Composition and Bankruptcy

The company’s financial structure being unable to even cover employee claims is the most important indicator that the composition has no chance of success. The Sakarya Regional Court of Justice clearly stated this situation in one of its decisions: “that it could not pay employee salaries for the 1st, 2nd, 3rd, 5th, 6th, and 7th months of 2023… it was not possible for a company that could not even pay its ordinary expenses to benefit from the composition institution” (2023/2492 E., 2024/270 K.). In such cases, courts reject the request for composition in accordance with Article 292 of the EBL (Enforcement and Bankruptcy Law) and decide on the company’s bankruptcy.

After the bankruptcy decision, employee claims are registered with the bankruptcy estate. As seen in the decision of the Bakırköy 6th Commercial Court of First Instance, claims are notified with a request for registration and acceptance into the bankruptcy estate and are paid preferentially according to the order in Article 206 of the EBL (Enforcement and Bankruptcy Law) (2021/66 E., 2024/353 K.). In special cases such as bankruptcy-in-composition, as in a decision by the Ankara Regional Court of Justice, it may be decided that, following the approval of the project, the money in the bankruptcy file is released and employee claims are paid in full within one week (2024/74 E., 2024/513 K.).

C. Collection in Case of Violation of the Approved Composition

Even if the concordat is approved, if the debtor company fails to comply with the payment plan, a new legal path opens for the creditor employee. Article 308/e of the EBL (Enforcement and Bankruptcy Law) regulates this situation. This provision was cited as follows in a decision by the Gaziantep Regional Court of Justice: “Every creditor who has not received performance under the concordat project retains the new rights acquired under the concordat, but can apply to the court that approved the concordat to have the concordat terminated with respect to them.” (2024/49 E., 2024/266 K.).

The decision to terminate frees the creditor from the binding nature of the concordat project and allows them to initiate enforcement proceedings for the full amount of their claim. As stated by the Istanbul Regional Court of Justice, “With the partial termination of the concordat, the creditor is freed from the obligation of the project and virtually returns to the previous state, regaining their entire claim.” (45. HD, 2023/1015 E., 2024/1334 K.). However, as pointed out in a decision by the Ankara West Civil Court of Commerce, before initiating a termination lawsuit, the creditor may need to send a warning to the debtor, putting them in default (2018/395 E., 2019/298 K.).

Conclusion

In light of judicial decisions, it is understood that the legislator has provided strong protection mechanisms for the collection of employee receivables from a company that has declared concordat. The classification of employee receivables as “privileged claims” under Article 206 of the EBL forms the basis of this protection.

The collection process generally proceeds as follows:

Before Approval: Claims are either paid directly or secured by sufficient collateral for the approval of the concordat. If this condition is not met, the concordat request is rejected.

Rejection of the Concordat: If the process fails, the company goes bankrupt, and labor receivables are collected preferentially from the bankruptcy estate.

Post-Approval: In case of non-compliance with the project, the creditor employee can have the concordat terminated with respect to themselves and initiate enforcement proceedings for the full amount of their claim according to general provisions.

These methods aim to effectively protect the rights of labor creditors at every stage of the concordat process. An article suggestion.

Why Is Expert Concordat Lawyer Support Necessary?

The concordat process is a highly technical, multi-stage mechanism that generates different legal outcomes at each stage, especially regarding labor receivables. Although labor receivables are privileged under Article 206 of the Enforcement and Bankruptcy Law (EBL), providing significant protection to the creditor; this protection can only be practically utilized through the complete follow-up of steps requiring a high level of expertise, such as the correct evaluation of collateral conditions during the concordat approval stage, the accurate determination of the path to be followed in case of non-compliance with the approved project, and the timely execution of disputed claim processes. As seen in numerous judicial decisions, courts apply concordat criteria quite strictly; there are many rulings where incomplete payment, insufficient collateral, or delays, particularly concerning labor receivables, can lead to the rejection of the concordat or bankruptcy. Therefore, for the creditor to protect their rights, it is dependent on correctly managing the nature and timing of the process.

Each of these completely different legal mechanisms, such as the approval or rejection of a concordat, the process following a bankruptcy decision, the annulment of a concordat, or a disputed receivables lawsuit, has its own specific deadlines, procedures, and evidentiary requirements. An erroneous action or delay can lead to labor receivables being excluded from the concordat’s scope, the inability to annul the concordat, the provided collaterals being deemed insufficient, or being recorded in the bankruptcy estate in the wrong order. Especially since the warning to be issued in case of non-compliance with the post-approval payment plan, the calculation of deadlines, and the application for annulment involve technical details, it is often not possible for an employee to manage the entire process correctly on their own. A significant portion of labor receivables can be lost without being collected due to the process being mismanaged.

For this reason, it is of critical importance for employees seeking their rights during the concordat process, especially those pursuing receivables from companies operating in areas with intense commercial activity such as Istanbul, Tuzla, Pendik, Kartal, Maltepe, Kadıköy, Ataşehir, Ümraniye, Gebze, Dilovası, and Çayırova, to seek support from a lawyer specializing in concordat and bankruptcy law. Expert concordat lawyers professionally manage all processes including collateral evaluation, objection at the approval stage, annulment application, disputed receivables lawsuits, and registration with the bankruptcy estate, taking all necessary legal steps to prevent the loss of receivables. In this way, labor creditors can obtain their receivables through the most effective legal means without suffering any loss of rights due to the complexity of the concordat process.