Introduction

Do enforcement and foreclosure proceedings stop when a concordat is declared? This study examines the effect of the declaration of concordat on enforcement and foreclosure proceedings, within the framework of the analysis responses provided by judicial decisions. The study analyzes the general rule of prohibition of execution during the concordat process (temporary and final moratorium), the legal basis of this prohibition, its scope, its exceptions, and the fate of enforcement and foreclosure proceedings at different stages of the process (moratorium, ratification, rejection).

General Rule: Suspension of Proceedings: Almost all judicial decisions agree that with the issuance of a temporary or final moratorium decision upon a concordat request, no new enforcement proceedings can be initiated against the debtor, and previously commenced proceedings will be suspended.

Legal Basis: The fundamental legal basis of this rule is Article 294 of the Enforcement and Bankruptcy Law (EBL), which is referenced in many decisions. This article mandates the suspension of all proceedings, including public receivables, and the non-application of measures such as provisional attachment.

Fate of Seizures Prior to Moratorium: A concordat moratorium does not automatically invalidate seizures lawfully placed before the moratorium; it only prevents enforcement actions such as sales based on these seizures. However, upon the approval of the concordat, in accordance with Article 308/ç of the EBL (Enforcement and Bankruptcy Law), seizures placed before the provisional moratorium decision and not yet converted into cash become null and void.

Important Exceptions: The prohibition of enforcement is not absolute. Enforcement proceedings can be initiated or continued for claims secured by a pledge, but custody and sale procedures cannot be carried out. Furthermore, concordat protection is specific to the principal debtor and generally does not cover joint and several guarantors or endorsers.

Distinction Between Enforcement Actions and Lawsuits: While the concordat moratorium halts enforcement proceedings, it does not prevent the initiation or continuation of lawsuits concerning the merits of a claim, such as actions for the annulment of an objection. However, the enforcement of decisions rendered as a result of these lawsuits cannot be carried out until the concordat process is concluded.

Provisional Nature of Measures: The enforcement prohibition applied during the moratorium period is contingent on the outcome of the concordat process. Should the concordat request be rejected or the process result in bankruptcy, all measures imposed by the court are lifted, and creditors’ ability to pursue enforcement actions is reinstated.

A. General Rule and Scope of Enforcement Prohibition in Concordat

All reviewed court decisions agree that the concordat moratorium (temporary and definitive) is a fundamental mechanism protecting the debtor against creditors’ enforcement proceedings. This situation is clearly stated in the decision of the 12th Civil Chamber of the Court of Cassation, numbered 2022/13472 E., with reference to Article 294 of the EBL (Enforcement and Bankruptcy Law): “no enforcement proceedings, including those carried out against the debtor under the Law on the Procedure for Collection of Public Receivables No. 6183, can be initiated during the moratorium, and previously commenced proceedings shall cease, and precautionary injunctions and provisional attachment orders shall not be enforced.”

This prohibition covers not only private receivables but also public receivables (Council of State 3rd Chamber, 2022/2552 E.; Istanbul Regional Court of Appeals 45th Civil Chamber, 2022/1657 E.). Courts decide to “suspend all enforcement proceedings, including all types of precautionary injunctions, provisional attachments, and preservation measures, by means of a precautionary injunction” with the moratorium decision to protect the debtor’s assets (Court of Cassation 12th Civil Chamber, 2020/7768 E.). Enforcement proceedings initiated after the moratorium decision are deemed unlawful and annulled (Court of Cassation 12th Civil Chamber, 2023/7159 E.).

B. Effect of Attachments Placed Before the Moratorium in Concordat and the Confirmation of the Concordat

A concordat moratorium stops commenced enforcement proceedings “where they stand.” In the decision of the Council of State 3rd Chamber, numbered 2023/4599 E., it was emphasized that an attachment properly executed before the moratorium decision would not automatically become unlawful due to the moratorium decision and would not need to be lifted. This interpretation shows that the moratorium stops the subsequent procedures based on this attachment (e.g., sale), not the validity of the existing attachment.

However, the situation changes with the approval of the concordat project. As emphasized in numerous decisions of first instance courts and regional courts of appeal, Article 308/ç of the EBL comes into effect once the concordat becomes binding. In the decision numbered 2025/854 E. of the 23rd Civil Chamber of the Ankara Regional Court of Justice, this effect was explained as follows: “it nullifies attachments that were placed in proceedings initiated before the temporary respite decision and have not yet been converted into cash.” This provision aims for the debtor, if the concordat is successful, to continue their commercial activities by being relieved from the pressure of old attachments that have not yet been converted into cash.

C. Exceptions and Limitations to the Prohibition of Enforcement Proceedings in Concordat

The prohibition of enforcement proceedings is not absolute, and there are important exceptions as specified in judicial decisions:

Secured Debts: As stated in the decision numbered 2022/259 E. of the 13th Civil Chamber of the Istanbul Regional Court of Justice, the situation is different for secured creditors: “During the respite, enforcement proceedings can be initiated or continued for claims secured by a pledge, by means of converting the pledge into cash; however, no protective measures can be taken due to these proceedings, and the secured asset cannot be sold.” This situation protects the guarantee provided by the right of pledge, while preventing the debtor’s assets from being converted into cash, thereby allowing the concordat process to proceed.

Guarantors and Aval Providers: The protection provided by the concordat respite is personal and binds only the debtor who applied for concordat. In the decision numbered 2021/456 E. of the Ankara 6th Civil Court of Commerce, it was stated that “Claims related to concordat are valid only for the principal debtor”, and that the principal debtor being in the concordat process does not prevent enforcement proceedings against joint and several guarantors. Similarly, it is observed that the right to recourse against the aval provider is also not prevented (Istanbul Regional Court of Justice 14th Civil Chamber, 2021/1198 E.).

Right to Sue: The prohibition of enforcement proceedings covers enforcement actions, but does not prevent lawsuits filed for the determination or collection of a claim (e.g., a lawsuit for the annulment of an objection). In the decision numbered 2020/1386 E. of the Izmir Regional Court of Justice 17th Civil Chamber, it was explicitly stated that such lawsuits can continue without waiting for the outcome of the concordat, but the execution of the decision rendered as a result of the lawsuit cannot be carried out during the respite period.

D. Termination of Measures in Concordat

The protection provided by the concordat respite ends with the final decision of the process. As in the decision numbered 2021/403 E. of the Ankara 3rd Civil Court of Commerce, upon the approval of the concordat, it is ruled that “All precautionary measures ordered by our Court shall be lifted as of the date of the approval decision”, and the concordat project comes into effect. Conversely, if the request for concordat is rejected or the debtor is declared bankrupt, the measures are also lifted, and creditors’ enforcement rights are revived within the framework of general provisions (Istanbul Anatolian 1st Civil Court of Commerce, 2018/1387 E.).

Conclusion

In light of the submitted court decisions, with the declaration of a concordat, enforcement and attachment proceedings against the debtor generally cease during the temporary or final respite period granted by the court. This prohibition, based on Article 294 of the EBL (Enforcement and Bankruptcy Law), prevents new proceedings from being initiated, including for public receivables, and halts existing proceedings where they stand. In the event of the approval of the concordat, attachments levied before the respite period and not yet converted into cash are lifted in accordance with Article 308/ç of the EBL. However, this protection is subject to significant exceptions such as secured receivables (with a prohibition on sale and preservation), guarantors, and the right to file a lawsuit. Consequently, while the concordat respite period grants the debtor an opportunity to “breathe” and improve their financial situation, this protection is limited by the success of the process and valid within the framework of the exceptions specified in the law. Article suggestions.

Why is Expert Concordat Lawyer Support Necessary?

The concordat process is a procedure prone to errors because it involves highly technical areas such as the prohibition of proceedings, the fate of attachments, exceptions for secured receivables, the lifting of attachments after approval, and the continuation of proceedings against guarantors and endorsers. Court decisions clearly demonstrate that creditor-debtor relationships become complex during the concordat respite period and that a single incorrect assessment can lead to significant loss of rights.

Therefore, it is of vital importance that concordat files are expertly managed for companies operating in areas with intense commercial activity, especially in regions such as Istanbul, Tuzla, Pendik, Kartal, Maltepe, Kadıköy, Ataşehir, Ümraniye, Levent, Maslak, as well as for businesses located along the industrial lines of Gebze, Dilovası, Çayırova, Tepeören, Şekerpınar.

An expert concordat lawyer;

correctly evaluates the scope of the stay of proceedings, including public receivables,

clarifies which actions secured creditors can pursue,

determines whether pre-moratorium attachments will lapse after confirmation,

develops a follow-up strategy for guarantors and endorsers,

ensures that both the debtor and the creditor act with minimum risk in every scenario, such as moratorium, confirmation, rejection, or bankruptcy,

prepares the legal roadmap for the company to recover financially at the end of the process.

A concordat is not merely an application file due to its technical aspects; if not managed correctly, it can lead to irrecoverable consequences for companies. Therefore, having all stages of the process handled by a lawyer experienced in concordat matters is the safest and most appropriate approach for both the debtor and the creditor.