Introduction

This study analyzes the questions of whether enforcement proceedings can be initiated against a company that has declared concordat, and what the fate of previously commenced proceedings will be, in light of the judicial decisions presented. The relevant articles of the Enforcement and Bankruptcy Law (EBL), especially Article 294 et seq., constitute the fundamental legal framework of this process. The analyses reveal the effects of different stages of the concordat process (provisional respite, definitive respite, approval, rejection, or termination) and types of receivables (ordinary, collateralized, public receivables) on enforcement proceedings. Judicial decisions confirm that the general rule is a prohibition of enforcement, while also detailing significant exceptions and different legal situations.

1. Prohibition of Enforcement During the Concordat Respite Period and Suspension of Existing Proceedings

The principle most clearly set forth in judicial decisions is the prohibition of enforcement proceedings arising from Article 294 of the EBL. In the decision numbered 2020/7768 E. of the 12th Civil Chamber of the Court of Cassation, this situation is clearly stated with reference to the provision:  “No enforcement proceedings can be initiated against the debtor during the moratorium period…” This prohibition aims to protect the debtor’s assets and ensure the success of the concordat project. The decision numbered 2022/2552 E. of the 3rd Chamber of the Council of State confirms that this prohibition also covers public receivables under Law No. 6183.

The fate of enforcement proceedings initiated during the moratorium period is “invalidity.” In the decision numbered 2025/742 E. of the 11th Civil Chamber of Izmir Regional Court of Justice, it was stated that  “It cannot be argued that a valid enforcement proceeding exists due to the initiation of proceedings after the interim injunction,” emphasizing that lawsuits based on such proceedings cannot be heard. Similarly, the decision of the Bakırköy 7th Civil Court of Commerce, numbered 2020/461 E., ruled that  “since the proceeding initiated against the defendant during the period of enforcement prohibition is in question, and therefore, it cannot be deemed a properly initiated proceeding… the case should be procedurally dismissed due to the absence of a condition for suit,” demonstrates the consistent application of this rule.

2. Exceptions to the Prohibition of Enforcement Proceedings and Excluded Situations

The general rule is not absolute, and judicial decisions shed light on significant exceptions.

Secured Receivables: 

The most significant exception is secured receivables. In the decision of the Istanbul Regional Court of Justice 13th Civil Chamber, numbered 2022/259 E., with reference to Article 295 of the EBL, the following important determination was made: “During the grace period, enforcement proceedings for the realization of a pledge may be initiated or ongoing proceedings may be continued, but no protective measures can be taken due to these proceedings, and the sale of the pledged asset cannot be realized.” This situation protects the right of the pledge holder to initiate proceedings, while preventing sales transactions that would jeopardize the concordat process.

Guarantors: 

In accordance with the principle of individuality of concordat measures, protection is valid only for the debtor company. In the decision of the Ankara Regional Court of Justice 21st Civil Chamber, numbered 2021/498 E., it was clearly stated that “granting a concordat grace period for the principal debtor does not prevent the creditor bank from applying to the guarantors without applying to the debtor.” 

Pending Lawsuits: 

While the stay of execution suspends enforcement proceedings, it does not prevent lawsuits concerning the merits of the receivable. As stated in the decision of the Istanbul 19th Commercial Court of First Instance, numbered 2021/577 E., “the concordat lawsuit and the granting of a grace period decision under Article 294 of the EBL will not constitute an impediment to filing an action for annulment of objection against the defendant or to continuing an already filed lawsuit.” However, the enforcement of the decision rendered as a result of the lawsuit will be subject to concordat provisions.

3. Effect of the Conclusion of the Concordat Process on Proceedings

Confirmation Decision: The confirmation of the concordat creates a new legal situation between creditors and the debtor. In the decision numbered 2018/945 E. of Bakırköy 1st Commercial Court of First Instance, the judgment rendered in accordance with Article 308/ç of the EBL summarizes this situation: “Since the concordat has become binding with this confirmation decision, the attachments placed in enforcement proceedings initiated before the provisional grace period decision, in accordance with Article 308/ç of the EBL, which have not yet been converted into money, are … TO BE DISCHARGED” it has been decided. With this decision, the individual collection rights of ordinary creditors cease, and they must collect their receivables within the scope of the project.

Rejection or Annulment Decision: The unsuccessful conclusion of the process removes the prohibition on enforcement proceedings. In the decision numbered 2024/1031 E. of Bakırköy 2nd Commercial Court of First Instance, it was determined that the enforcement proceeding initiated after the rejection of the concordat case and the lifting of precautionary measures was lawful. Similarly, if the confirmed project is not adhered to, the creditor may request the annulment of the concordat with respect to themselves. As stated in the decision numbered 2023/280 E. of Konya 4th Commercial Court of First Instance, with the acceptance of the annulment request, the creditor is granted “the authority to initiate enforcement proceedings and continue halted proceedings”.

Conclusion

In line with the examined court decisions, as a rule, it is not possible to initiate enforcement proceedings against a company that has declared concordat (and obtained a provisional or final grace period). The grace period decision acts as a shield protecting the debtor against individual collection efforts by creditors; it prevents new proceedings and halts existing ones. Proceedings initiated during the grace period are considered legally invalid.

However, this general rule has significant exceptions such as secured claims, privileged claims under Article 206/1 of the EBL, and guarantors of the debtor company. The final outcome of the concordat process (approval, rejection, or annulment) definitively determines the fate of enforcement proceedings. While an approval decision leads to the lifting of attachments and the restructuring of claims within the scope of the project; a rejection or annulment decision revives creditors’ rights to initiate enforcement proceedings. Therefore, a company being in a concordat process does not completely eliminate creditors’ enforcement rights, but it subjects the exercise of these rights to specific rules based on the stage of the process and the nature of the claim. An article suggestion.

Why is Expert Lawyer Support Necessary in Enforcement Proceedings During a Concordat Process?

Whether enforcement proceedings can be initiated against a company that has declared a concordat, which proceedings will be stayed, or in which cases they may continue; requires a technical assessment in light of Articles 294, 295, and 308/ç of the Enforcement and Bankruptcy Law, and the precedents of the Court of Cassation and Regional Courts of Justice. The scope of the prohibition on enforcement, whether the claim is ordinary, secured, or privileged, whether the moratorium is temporary or definitive, and whether the process concludes with approval, rejection, or annulment can lead to different legal outcomes in each specific case.

The most common mistakes made in practice are; initiating enforcement proceedings while the concordat grace period is ongoing, filing lawsuits based on invalid proceedings, incorrect application of exceptions for secured claims, and erroneous evaluation of the fate of attachments after the confirmation decision. Such errors can lead to loss of rights for the creditor and an unnecessary prolongation of the process for the debtor.

Particularly in regions with a high concentration of commercial disputes such as Istanbul, Tuzla, Pendik, Kartal, Maltepe, Şişli, and Ataşehir, Gebze, Çayırova, Şekerpınar, concordat cases require a high level of technical knowledge and experience. Tuzla 2M Law Firm offers results-oriented and strategic legal support in the concordat process, in accordance with the practice of the Court of Cassation, regarding the status of enforcement proceedings, secured claims, recourse to guarantors, and follow-up strategies after the confirmation or annulment of the concordat. Expert legal support is of great importance to prevent loss of rights and ensure the proper management of the process.