When a Turkish Issuer or Broker Becomes Insolvent: Concordat, Bankruptcy Claims and Client-Asset Protection for Foreign Investors

Market crises are often followed by insolvencies. If a Turkish listed company, a bond issuer or a brokerage connected with the 2026 fund and market manipulation cases cannot pay its debts, foreign institutional investors holding damages claims, bonds or assets at the firm will meet Turkish insolvency law. Three regimes matter. A debtor may obtain a concordat moratorium, during which enforcement stops, a court-appointed commissioner supervises the business and creditors vote on a restructuring plan (Enforcement and Bankruptcy Law Arts. 285–308/h). If the company is declared bankrupt, its assets form an estate, creditors register their claims within one month of the announcement and are paid in the statutory order (Arts. 184, 206 and 219). If a brokerage fails, client cash and securities stay outside its bankruptcy estate (Capital Markets Law Art. 46(6)) and the Investor Compensation Center pays compensation up to a statutory ceiling (Arts. 82–86). Several deadlines are very short: seven days to object to a provisional moratorium, fifteen days to file claims in a concordat, fifteen days to sue against the schedule of claims in a bankruptcy. This guide explains each regime, the deadlines and what a foreign creditor should do. It reflects the legislation in force as at 25 October 2026.

Three regimes an investor may meet

Turkish insolvency law is contained mainly in the Enforcement and Bankruptcy Law No. 2004 (İcra ve İflas Kanunu, “İİK”). For capital market institutions, the Capital Markets Law No. 6362 adds its own rules on client assets, investor compensation and gradual liquidation. Which rules apply depends on who is in difficulty and what the investor holds against it.

The regimes can follow each other. A concordat that fails can end in bankruptcy declared by the court of its own motion (İİK Arts. 292 and 308). A brokerage in gradual liquidation can be put into bankruptcy at the request of the Investor Compensation Center, with SPK’s approval, if its assets prove insufficient (Capital Markets Law Art. 86(8)). An investor who has already started proceedings against an issuer, or obtained a precautionary attachment, needs to know how each regime affects those steps.

What you hold decides your position

An institutional investor affected by the 2026 cases may stand in one or more of four positions, and insolvency law treats each differently.

• ▸ Damages creditor. A claim for compensation against the issuer, for example for misleading disclosures under Capital Markets Law Art. 32, is a monetary claim. In a concordat it is filed with the commissioner; in a bankruptcy it is registered with the bankruptcy office. Article 206 of the İİK contains no special rank for such claims, so unless secured or made privileged by a special law they fall in the fourth, general rank.
• ▸ Bondholder. A holder of debt instruments is a creditor for principal and interest. In addition to insolvency rules, the bondholders’ board under Capital Markets Law Art. 31/A can bind dissenting holders to amended terms.
• ▸ Shareholder. Shares themselves give no claim against the insolvent company. Shareholders receive only what remains after all creditors are paid, which in practice is rarely anything. A shareholder’s separate damages claim is treated as a creditor claim, as above.
• ▸ Client of an intermediary. Cash and securities held for the investor by a brokerage are not the firm’s assets. They are kept outside its bankruptcy estate (Capital Markets Law Art. 46(6)) and are distributed to their owners first in an investor compensation process (Art. 85(3)).

Warning signs and the board’s duties

The Turkish Commercial Code No. 6102 imposes duties on the board of a joint stock company when losses mount. If the last annual balance sheet shows that half of the total of share capital and statutory reserves has been lost, the board must immediately convene the general meeting and propose remedial measures (Art. 376(1)). If two-thirds is lost, the general meeting, convened at once, must resolve either to continue with one-third of the capital or to replenish it; otherwise the company dissolves by operation of law (Art. 376(2)).

Where there are signs that the company may be over-indebted, the board must prepare an interim balance sheet on both a going-concern basis and at probable sale values. If assets do not cover creditors’ claims, the board must notify the commercial court at the registered seat and request bankruptcy, unless creditors with claims large enough to cover the deficit have agreed in writing to rank behind all other creditors and court-appointed experts have verified that agreement (Art. 376(3)). The board or any creditor may request a concordat together with, or during, such a bankruptcy procedure (Art. 377). The Enforcement and Bankruptcy Law mirrors this: a capital company that is over-indebted on an interim balance sheet at probable sale prices is declared bankrupt without prior enforcement where this is declared by its management, its liquidators or a creditor and established by the court (İİK Art. 179).

In companies whose shares are traded on the exchange, the board must also establish an expert committee for the early detection of risks threatening the company’s existence, which reports to the board every two months; the report is also sent to the auditor (Commercial Code Art. 378). These reports, and the board’s response to them, are relevant evidence if directors are later sued. Failure to perform duties imposed by law is the basis of directors’ liability under Art. 553, discussed in Suing Directors and Auditors of Turkish Listed Companies.

Concordat: who can apply and what is filed

Any debtor who cannot pay its debts as they fall due, or is at risk of being unable to do so, may request a concordat in order to pay its debts with extended maturities or reductions, or to avoid a likely bankruptcy (İİK Art. 285(1)). Importantly for investors, the right is not limited to the debtor: any creditor entitled to request the debtor’s bankruptcy may, by a reasoned petition, request that concordat proceedings be opened against the debtor (Art. 285(2)). The competent court is the commercial court of first instance (asliye ticaret mahkemesi) at the debtor’s place of business determined under Art. 154 (Art. 285(3)). The applicant must pay an advance on the costs of the concordat set by a Ministry of Justice tariff (Art. 285(4)).

The debtor must attach to its request (Art. 286(1)):

• ▸ a preliminary concordat plan stating at what rate and on what schedule debts will be paid, how much creditors will waive, whether assets will be sold and how the necessary funding will be obtained;
• ▸ documents showing its financial position, including for merchants the last balance sheet, income and cash-flow statements, interim balance sheets on a going-concern basis and at probable sale values, lists of assets with book values and lists of all receivables and debts with maturities;
• ▸ a list of creditors, their claims and any privileges;
• ▸ a table comparing what creditors would receive under the plan with what they would probably receive in a bankruptcy; and
• ▸ an audit report by an independent audit firm authorised by the Public Oversight Authority, prepared under Turkish Auditing Standards, giving reasonable assurance that the plan’s offer will be achieved.

The comparison table and the audit report are the first documents an investor should obtain. They show whether the plan offers more than bankruptcy would, which is a condition of confirmation (Art. 305(1)(a)), and on what assumptions. Where a creditor requests the concordat, the debtor must produce these documents within a reasonable period set by the court, and the creditor bears the cost of preparing them; if they are not produced in full and on time, no provisional moratorium is granted and the creditor’s request is rejected (Art. 287(2)).

The provisional moratorium and the seven-day objection

Once the court finds that the required documents are complete, it immediately grants a provisional moratorium (geçici mühlet) and takes all measures it considers necessary to preserve the debtor’s assets (İİK Art. 287(1)). It appoints a provisional commissioner to examine closely whether the concordat can succeed; where the number of creditors and the size of claims justify it, three commissioners may be appointed, one of whom must then be an authorised independent auditor (Art. 287(3)).

The provisional moratorium lasts three months. On the request of the debtor or the provisional commissioner made before it expires, the court may extend it by up to two further months; the total may not exceed five months (Art. 287(4)). No appeal lies against the grant of a provisional moratorium, the appointment of the commissioner, an extension or protective measures (Art. 287(6)).

The provisional moratorium has the same effects as the definitive moratorium (Art. 288(1)). It is published in the Turkish Trade Registry Gazette and on the official advertisement portal of the Press Advertising Agency, and notified at once to the land registry, the trade registry, the tax office, customs and postal administrations, the banking associations, chambers of commerce and industry, exchanges, the Capital Markets Board and other relevant bodies (Art. 288(2)). The announcement must state that creditors may, within a definitive period of seven days from the announcement, object by petition with their evidence that no circumstances justify a moratorium, and ask the court to reject the concordat request (Art. 288(2)).

The definitive moratorium and the commissioner

The court decides on the definitive moratorium (kesin mühlet) within the provisional period, after inviting the debtor and any creditor who requested the concordat to a hearing and receiving the provisional commissioner’s written report (İİK Art. 289(1)–(2)). If the concordat appears capable of success, the court grants a definitive moratorium of one year (Art. 289(3)). In particularly difficult cases, on the commissioner’s reasoned report and request, the court may extend it by up to six months; the debtor may also ask for an extension, in which case the commissioner is heard, and any creditors’ committee is consulted before an extension is granted (Art. 289(5)).

With the definitive moratorium, or at a suitable time during it, the court may form a creditors’ committee of an odd number of members, not exceeding seven and unpaid. Creditor classes with legally different claims, and any secured creditors, must be fairly represented; the commissioner’s opinion is obtained, and the committee meets at least once a month (Art. 289(4)). An institutional investor with a significant claim may ask to be considered for the committee.

The commissioner’s duties include contributing to the completion of the plan, supervising the debtor’s activities and, notably, informing creditors who so request about the progress of the concordat and the debtor’s current financial position (Art. 290(2)(f)). Complaints about the commissioner’s acts are decided finally by the commercial court (Art. 290(4)). A foreign investor should use the right to information from the start, in writing, through its Turkish lawyer.

The moratorium can end early. If the intended recovery is achieved, the court lifts the moratorium and rejects the request (Art. 291). For a debtor subject to bankruptcy, the court lifts the moratorium, rejects the concordat and declares bankruptcy of its own motion, on the commissioner’s written report, if bankruptcy is needed to protect the assets, if the concordat cannot succeed, if the debtor breaches the restrictions of Art. 297 or the commissioner’s instructions or is found to be acting to harm creditors, or if an over-indebted capital company withdraws its request (Art. 292(1)). No appeal lies against the grant of a definitive moratorium; a rejection of the concordat at this stage, without bankruptcy, may be appealed to the regional court within two weeks of service, and the regional court’s decision is final (Art. 293).

What the moratorium does to your claim

Two practical consequences follow for investors. First, Art. 294 speaks of enforcement proceedings, interim injunctions and precautionary attachments; it does not, in its terms, stop lawsuits on the merits. A damages action against the issuer can therefore be brought or continued to establish the claim, but a judgment cannot be enforced while the moratorium lasts. Establishing the claim matters, because a disputed claim is otherwise counted in the vote only as the court decides (Art. 302(6)) and must be sued on within one month after confirmation (Art. 308/b).

Second, an investor who has obtained a precautionary attachment against the issuer’s assets, as described in Freezing Assets in Turkey for Investor Claims, cannot have it executed during the moratorium, and once the concordat becomes binding, attachments made in proceedings started before the provisional moratorium and not yet converted into money fall away (Art. 308/ç(1)). Freezing orders against third parties, such as directors or related parties who are not in concordat, are not affected by the issuer’s moratorium.

Filing a claim in a concordat

The commissioner announces the proceedings and invites creditors to file their claims within fifteen days of the announcement; copies are posted to creditors whose addresses are known. The announcement warns that creditors who do not file will not be admitted to the negotiation of the plan unless their claims are recorded in the balance sheet (İİK Art. 299). The commissioner asks the debtor to comment on each claim and examines its books and documents to check whether the claim is well founded; the result appears in the commissioner’s report (Art. 300).

When the plan is ready and the claims have been filed and examined, the commissioner calls a creditors’ meeting by a new announcement. The meeting must be held at least fifteen days after the announcement, and creditors may inspect the documents during the seven days before it (Art. 301).

For a damages claim, the filing is in effect a short statement of case. The trade records, the misleading disclosures and the loss calculation should be attached in a form that lets the commissioner and the court see at once that the claim is serious. The approach to quantification is set out in Calculating Damages in Turkish Securities Claims, and the documents needed in Obtaining and Preserving Evidence in Turkey.

The creditors’ vote

The commissioner chairs the meeting and reports on the debtor’s position, and the debtor must attend to give explanations (İİK Art. 302(1)–(2)). The plan is accepted if it is signed by a majority exceeding either of the following thresholds (Art. 302(3)):

Only creditors affected by the plan vote. First-rank privileged creditors under Art. 206 and certain close relatives of the debtor are not counted (Art. 302(4)). Secured claims count only for the part left unsecured on the valuation of the collateral under Art. 298 (Art. 302(5)). For disputed claims, claims subject to a suspensive condition and claims with an indefinite maturity, the court decides whether and to what extent they are counted, without prejudice to later judgments on them (Art. 302(6)). The minutes are signed at once with the votes for and against, and creditors who adhere within seven days after the meeting are also counted (Art. 302(7)). Within seven days after the adhesion period, the commissioner submits all documents and a reasoned report to the court on whether the plan was accepted and whether it should be confirmed (Art. 302(8)).

A separate track applies to secured creditors in an ordinary concordat. If the debtor’s preliminary plan proposes restructuring secured debts, the commissioner negotiates with all secured creditors; an agreement accepted by secured creditors holding more than two-thirds of secured claims by amount binds the dissenting secured creditors to the longest maturity agreed with the others, with contractual pre-default interest (İİK Art. 308/h). Most investor claims are unsecured and are not affected by this track.

Court confirmation and appeals

The court examines the concordat after receiving the commissioner’s report and must decide within the definitive moratorium. The hearing date is announced, and creditors who object may attend if they notify their grounds in writing at least three days before the hearing (İİK Art. 304(1)). If a decision cannot be given within the moratorium, the court may continue its effects for up to six months (Art. 304(2)).

The plan may be confirmed only if the following conditions are met (Art. 305(1)):

• ▸ the amount offered exceeds what creditors would probably receive in the debtor’s bankruptcy; in a concordat by assignment of assets, the proceeds exceed the likely bankruptcy proceeds;
• ▸ the amount offered is proportionate to the debtor’s resources, including, at the court’s discretion, expected rights;
• ▸ the plan was accepted by the majority required by Art. 302;
• ▸ full payment of first-rank privileged claims, and of debts incurred during the moratorium with the commissioner’s permission, is adequately secured unless the creditor expressly waives this; and
• ▸ the costs of confirmation and the fee calculated on the amount to be paid to creditors are deposited before the decision.

The court may, of its own motion or on request, ask for the plan to be corrected if it finds it insufficient (Art. 305(2)). The confirmation decision states to what extent creditors waive their claims and the payment calendar. The court may appoint a trustee (kayyım) to supervise performance, who reports to the court every two months; creditors may inspect these reports (Art. 306(1)–(2)).

The court confirming the concordat may order the debtor to deposit with a bank the share of disputed claims under the plan until the decision becomes final. Creditors who do not sue in time cannot claim payment from that share, which is then returned to the debtor (Art. 308/b(2)). The one-month period is therefore a hard deadline for any investor whose damages claim the debtor has not accepted.

If the plan is not confirmed, the court rejects the concordat, and where the debtor is subject to bankruptcy and a ground for direct bankruptcy exists, it declares bankruptcy of its own motion (Art. 308(1)). The court then decides whether liquidation follows the summary or ordinary procedure, and may entrust ordinary liquidation to the commissioners, who then exercise the powers of the bankruptcy administration (Art. 308(2)).

After confirmation: binding effect and rescission

The concordat becomes binding with the confirmation decision, unless the plan provides that it binds only when the decision becomes final (İİK Art. 308/c(1)). Once binding, it applies to all claims that arose before the concordat request, and to claims that arose during the moratorium without the commissioner’s permission (Art. 308/c(2)). It does not bind first-rank privileged claims, secured claims up to the value of the collateral, or public receivables under Law No. 6183 (Art. 308/c(3)). Debts incurred after the provisional moratorium with the commissioner’s permission, including bank loans, are outside the concordat terms and are paid immediately after secured claims; in a later bankruptcy they are estate debts (Art. 308/c(4)).

• ▸ Side deals are void. Any promise by the debtor to a creditor beyond what the plan provides is void (Art. 308/d). An institutional creditor should not accept, and cannot rely on, private arrangements outside the plan.
• ▸ Partial rescission. A creditor who is not paid in accordance with the plan may apply to the confirming court to rescind the concordat as regards itself, while keeping the new rights acquired under it. Appeals against the decision lie within two weeks of service (Art. 308/e).
• ▸ Complete rescission. Any creditor may ask the confirming court to rescind a concordat obtained in bad faith; the final decision is announced, and Art. 308 then applies, which can lead to bankruptcy (Art. 308/f).

Guarantees and co-debtors need attention before the vote. A creditor who does not consent to the concordat keeps all its rights against persons jointly liable for the debt. A creditor who consents keeps those rights only if it has offered to assign its claim to them against payment and informed them of the date and place of the meetings at least ten days in advance (Art. 303(1)–(2)). An institutional investor holding guarantees from group companies or controlling shareholders should take these steps before voting in favour.

Bondholders

Holders of Turkish debt instruments have two capital markets tools alongside insolvency law. First, where an issuer fails to meet payment obligations, the document issued by the Central Registry Agency (Merkezi Kayıt Kuruluşu, “MKK”) to the holders counts as one of the documents listed in İİK Art. 68(1) (Capital Markets Law Art. 31(4)). In enforcement proceedings, this lets a bondholder ask for the debtor’s objection to be removed on the basis of documentary evidence, within six months of the objection being served (İİK Art. 68(1)).

Second, holders of an issuer’s outstanding debt instruments form a bondholders’ board, either for all outstanding instruments or for each series (Capital Markets Law Art. 31/A(1)). The rules for convening it and taking decisions must be set out in the prospectus or issue document (Art. 31/A(2)). Unless SPK or the issue documents set a stricter quorum, decisions require the affirmative vote of holders representing at least half of the nominal value of the relevant series or of all outstanding instruments, and decisions taken with the qualified majority bind holders who did not vote in favour (Art. 31/A(3)). SPK has set a two-thirds majority of the outstanding nominal value for decisions of a series board, subject to the issuer’s board approval and to review by a general board of other series (Communiqué II-31/A.1 Art. 4), as explained in Turkish Bond Defaults. A representative may be appointed (Art. 31/A(4)). If the terms are amended after a payment default, all enforcement proceedings started because of the default stop from the date the amended terms are deemed accepted, interim measures are not executed, and limitation periods do not run; the stayed proceedings lapse once all debts under the instrument are performed (Art. 31/A(5)).

These are separate mechanisms. The bondholders’ board operates under the capital markets rules and the issue documents; a concordat vote operates under the Enforcement and Bankruptcy Law. A foreign holder should read the issue documents for the board rules as soon as a default is announced, and file its claim in any concordat or bankruptcy in the ordinary way. Where instruments are secured under Art. 31/B, the collateral is held by a collateral agent; it is separate from the agent’s own assets and cannot be attached for the agent’s debts or included in the agent’s bankruptcy estate (Art. 31/B(6)).

Bankruptcy: how it opens and what it does

A Turkish company can become bankrupt in several ways: after ordinary enforcement by way of bankruptcy; directly, without prior enforcement, where the debtor has absconded, acted fraudulently against creditors, hidden assets, suspended payments or failed to pay a judgment debt (İİK Art. 177); on its own petition (Art. 178); on over-indebtedness of a capital company (Art. 179); or of the court’s own motion after a failed concordat (Arts. 292 and 308). Bankruptcy lawsuits are brought only before the commercial court at the debtor’s centre of business, and jurisdiction agreements are not permitted for them (Art. 154(3)). For businesses whose headquarters are abroad, the competent office is that of the Turkish branch, or of the main branch if there are several (Art. 154(2)).

Bankruptcy opens with the judgment, which states the moment of opening (Art. 165(1)). An appeal to the regional court lies within two weeks of service, but an appeal does not prevent the bankruptcy from being announced and the estate from being formed; the second creditors’ meeting cannot be held until the bankruptcy decision is final (Art. 164). The bankruptcy office notifies the decision to the land registry, the trade registry, the banking association, exchanges, the Capital Markets Board and others, and publishes it (Art. 166(2)).

The contrast with a concordat is worth noting. In a concordat, interest on unsecured claims stops from the definitive moratorium unless the plan provides otherwise (Art. 294(3)); in a bankruptcy, interest continues but ranks behind all principal (Art. 196). A pending damages action against the issuer is stayed in a bankruptcy (Art. 194) but not, by the terms of Art. 294, in a concordat.

Registering a claim in a bankruptcy

Within two months of receiving the bankruptcy decision, the bankruptcy office decides whether liquidation will follow the ordinary or the summary procedure (İİK Art. 208(3)). In an ordinary liquidation, the office announces the bankruptcy within ten days of that decision, and the time limits in the announcement are counted from the date of the last announcement (Art. 219(1)). The announcement calls on creditors and persons claiming ownership of assets to register their claims within one month of the announcement and to deposit the originals or certified copies of their evidence, such as documents and extracts from books. For creditors living in very distant places or abroad, the period may be extended (Art. 219(2)). The announcement also calls creditors to the first meeting, to be held within ten days of it (Art. 219(2), item 5).

The first creditors’ meeting has a quorum if creditors representing at least one quarter of the known claims attend in person or by representative; if fewer than five creditors attend, they must hold half of the claims. Decisions are taken by a majority of claim amounts (Art. 221). The bankruptcy administration, of three persons, is formed from candidates nominated by the creditors and chosen by the enforcement court (Art. 223(1)). A creditor who provides an address fit for service and pays an advance for service costs may require the administration’s decisions to be served on it, and the time limits for challenging them then run from service (Art. 223(3)).

After the registration period, the administration examines the claims, hears the bankrupt where possible and accepts or rejects each one (Art. 230). Claims registered late are accepted until the bankruptcy is closed, but the late creditor bears the resulting costs and has no share in distributions already decided (Art. 236).

Ranking of creditors

Secured creditors have priority over the proceeds of their collateral (İİK Art. 206(1)). The costs of the bankruptcy and of the liquidation are deducted first; from the proceeds of collateral, only the costs of preserving and realising it are deducted (Art. 248). Claims that are unsecured, or not covered by the collateral, are paid from the proceeds of the estate in four ranks (Art. 206(4)):

Creditors in the same rank share equally, and no creditor in a lower rank receives anything until those in the higher ranks have been paid in full (Art. 207). Investors’ damages claims and bond claims, unless secured or privileged by a special law, fall in the fourth rank and share pro rata with trade creditors and other unsecured lenders. Two special rules are relevant in the capital markets context. In the bankruptcy of a capital market institution, the Investor Compensation Center’s claims for payments made to investors are collected as privileged claims after the claims of the State and social security institutions under Law No. 6183, and are paid according to the estate’s cash position without waiting for the schedule of claims to become final (Capital Markets Law Art. 97(2)). And debts incurred with the commissioner’s permission during a failed concordat are estate debts in the subsequent bankruptcy (İİK Art. 308/c(4)).

Challenging the schedule of claims

After the registration period, and at the latest within two months of its election, the bankruptcy administration prepares the schedule of claims (sıra cetveli) ranking creditors under Arts. 206 and 207; in compelling cases the enforcement court may extend this once by up to two months (İİK Art. 232). Rejected claims are shown with the reasons for rejection (Art. 233). The schedule is announced, and creditors whose claims were rejected in whole or in part, or not admitted at the rank claimed, are informed directly (Art. 234).

A creditor who objects to the schedule must bring a lawsuit before the commercial court at the place where the bankruptcy was declared within fifteen days of the announcement (Art. 235(1)). If the objection is that its own claim was wrongly rejected or reduced, the action is against the estate; if it contests another creditor’s accepted claim or rank, the action is against that creditor (Art. 235(2)). If a creditor succeeds in having another creditor’s claim removed, the share allocated to that claim is paid to the objecting creditor, including costs, up to the amount of its own claim, and only the remainder goes to the other creditors (Art. 235(3)). The case follows the simple procedure. An objection only to the rank, not to the existence or amount of the claim, is made by complaint to the enforcement court (Art. 235(4)). At the claimant’s request, the court decides within fifteen days whether and to what extent it may take part in the second creditors’ meeting (Art. 235(1)).

Recovering assets: avoidance actions and assigned claims

Turkish law allows certain transactions made before an insolvency to be set aside by an avoidance action (iptal davası). It may be brought by a creditor holding a provisional or definitive certificate of shortfall, or by the bankruptcy administration or, in the cases of Arts. 245 and 255(3), by creditors themselves (İİK Art. 277). Three grounds are provided:

• ▸ Gratuitous dispositions. All gifts and gratuitous dispositions, other than customary presents, made within one year before a certificate of shortfall, an attachment report having the effect of one, or the opening of bankruptcy are subject to avoidance. Transactions with close relatives, transactions at a price far below value and certain lifetime-income and maintenance contracts are treated as gifts unless the contrary is proved (Art. 278, as amended by Law No. 7571 of 24 December 2025).
• ▸ Preferences when insolvent. Within one year before an attachment, a certificate of shortfall or bankruptcy, a debtor who does not pay its debts may not validly grant security for an existing debt that it had not earlier undertaken to secure, pay otherwise than in money or usual means of payment, or pay debts not yet due. The beneficiary can defeat the action by proving it did not know the debtor’s position (Art. 279).
• ▸ Intent to harm creditors. Any transaction by a debtor whose assets do not cover its debts, made with intent to harm creditors, can be set aside where the other party knew, or there were clear signs that should have made it aware, of the debtor’s financial position and intent; enforcement or bankruptcy proceedings must have been started against the debtor within five years of the transaction (Art. 280(1)). Knowledge is presumed for close relatives (Art. 280(3)).

The court hears avoidance actions under the simple procedure and may grant a precautionary attachment over the assets concerned (Art. 281). The action lies against the debtor, the persons who dealt with or were paid by it, their heirs and third parties acting in bad faith; good-faith third parties are protected (Art. 282). The right of action lapses five years after the transaction (Art. 284).

Where the creditors as a body decide not to pursue a claim of the estate, any creditor who asks may take over the right to pursue it. From what is recovered, costs are deducted, the assignee’s claim is paid, and the surplus goes to the estate (Art. 245). For an institutional investor this can be valuable: claims against directors, auditors or related parties that the estate will not fund can be pursued by the investor for its own benefit first. The Commercial Code applies the same logic to directors’ liability. In the bankruptcy of a company that has suffered loss, company creditors may also claim that compensation be paid to the company, but the bankruptcy administration first decides whether to bring the claim; if it does not, any shareholder or creditor may sue, and the proceeds go first to the creditors who sued (Commercial Code Art. 556(1)–(2)); Art. 245 of the İİK is preserved (Art. 556(3)).

At the end of the liquidation, the administration prepares the distribution schedule and final account, which remain at the bankruptcy office for ten days (İİK Arts. 247 and 249). Each creditor not paid in full receives a certificate of shortfall (aciz vesikası) for the unpaid amount; if the bankrupt acknowledged the claim, the certificate is a document of the kind listed in Art. 68(1). New enforcement against the former bankrupt is possible only if it acquires new assets (Art. 251).

When a brokerage fails

For an investor whose Turkish securities or cash are held through a local brokerage or bank, the most important rule is that these assets are not the firm’s. Cash and capital market instruments held by investors at investment firms, in whatever capacity, are monitored separately from the firm’s own assets and may not be used for the benefit of the firm or third parties without the investor’s express written consent (Capital Markets Law Art. 46(5)). They cannot be attached for the firm’s debts, even for public receivables, cannot be pledged without the investor’s prior written consent, cannot be included in the firm’s bankruptcy estate and cannot be subjected to interim injunctions (Art. 46(6)). Client cash held at banks must, as a rule, be kept in individual accounts opened for the firm’s clients, separately from the firm’s own cash; these accounts cannot be given as collateral for the firm’s loans, and no blocking or pledge in the firm’s favour may be created over them (Art. 46(7)). An investment firm, for these purposes, means a brokerage, a bank, or another capital market institution authorised to provide investment services (Art. 3(1)(v)).

Where a capital market institution fails its capital adequacy requirements, cannot meet obligations to pay cash or deliver financial instruments, or its finances weaken seriously, SPK may require it to strengthen its finances within up to three months, or directly suspend its activities, revoke its authorisations, decide to compensate investors, remove directors, order gradual liquidation or request bankruptcy (Art. 97(1)). Once authorisations are permanently revoked, the institution’s assets cannot be transferred, pledged, given as collateral, attached or made subject to interim measures, save for steps by SPK and the Investor Compensation Center; existing attachments and interim measures fall away and enforcement and bankruptcy proceedings stop automatically (Art. 97(2)). During a temporary suspension the same restrictions apply, and attachments, interim measures and enforcement and bankruptcy proceedings are stayed until activities resume (Art. 97(3)). A temporary closure may not exceed two years (Art. 97(4)).

Investor compensation. The Investor Compensation Center (Yatırımcı Tazmin Merkezi, “YTM”) is a public legal entity managed by SPK, and membership is compulsory for investment firms (Art. 83(1)–(2)). Compensation covers claims arising from the firm’s failure to pay cash or deliver instruments that it held or managed on the investor’s behalf in connection with investment services or ancillary services (Art. 84(1)). Losses from investment advice or from market price movements are not covered (Art. 84(2)), so YTM does not compensate manipulation losses as such. Claims of investors convicted of insider dealing, market manipulation or laundering are excluded to the extent of the related receivables, and payments to persons subject to criminal complaints for those offences are suspended until the judgment becomes final (Art. 84(3)). Directors, managers, shareholders holding five per cent or more and their relatives, group companies and persons responsible for or benefiting from the firm’s difficulties are not compensated (Art. 84(4)).

The maximum compensation per investor is set by the law at one hundred thousand Turkish lira, increased each year by the officially announced revaluation rate; on SPK’s proposal, the President may raise it up to five times. The ceiling covers all of an investor’s claims against the same firm regardless of the number, type or currency of accounts, and any excess assigned to another investor to obtain a second payment is not paid (Art. 84(5)). The current figure should be confirmed with YTM. Claims must be made to YTM in writing and are time-barred one year after the compensation decision is announced (Art. 85(1)). YTM must pay within three months of determining the beneficiaries and amounts, extendable by up to three months with SPK’s approval (Art. 85(2)), and is subrogated to the investors’ rights up to the amounts it pays (Art. 85(4)).

Gradual liquidation. When the compensation process closes, SPK may order the gradual liquidation (tedrici tasfiye) of a firm other than a bank, conducted by YTM (Art. 86(1)). Payments stop and only YTM may dispose of the firm’s assets. No enforcement under the İİK or Law No. 6183 is possible, pending proceedings stop, and no bankruptcy may be declared until the liquidation is closed (Art. 86(4)). From the assets, client claims are paid first, pro rata if they cannot all be met; then public receivables; then YTM’s claims for compensation paid and liquidation costs; and the balance goes to other creditors (Art. 86(5)). YTM must require asset declarations from controlling shareholders and may seek precautionary attachments, interim injunctions and travel bans against them without security (Art. 86(7)). If the assets are insufficient, YTM may request bankruptcy with SPK’s approval (Art. 86(8)).

Funds and their managers

For investors in Turkish investment funds, the fund’s assets are separate from those of the portfolio management company and of the institution providing custody (Capital Markets Law Art. 53(1)). Even if the management or supervision of the manager or custodian is transferred to public bodies, the fund’s assets cannot be used for any other purpose, cannot be attached, including for public receivables, cannot be subjected to interim injunctions and cannot be included in a bankruptcy estate (Art. 53(2)). When fund assets are liquidated, payments may be made only to unit holders (Art. 53(3)). The manager’s debts to third parties and the fund’s claims against the same third parties cannot be set off against each other (Art. 53(4)). The liquidation of funds in the 2026 cases is discussed in Turkey’s 2026 Fund Liquidation.

Looking beyond the insolvent company

An insolvent issuer is rarely the only possible defendant. Investors should assess at an early stage who else may be liable and solvent.

• ▸ Directors and auditors. Directors who failed to act on the capital loss and over-indebtedness rules of Commercial Code Art. 376, or who approved misleading statements, may be liable under Arts. 553 and 554 and Capital Markets Law Art. 63. In bankruptcy, creditors can pursue the company’s claim against them under Commercial Code Art. 556 if the bankruptcy administration does not. See Suing Directors and Auditors.
• ▸ Guarantors and co-debtors. Rights against them survive the concordat for non-consenting creditors, and for consenting creditors who take the steps in İİK Art. 303(2). In a bankruptcy, debts guaranteed by the bankrupt are registered even if not yet due (Art. 202(1)), and where several co-debtors are bankrupt at the same time, the creditor may claim the full amount from each estate (Art. 203).
• ▸ Persons who received assets. Avoidance actions under İİK Arts. 277–284 can reach those who received gifts or preferences or dealt with the debtor knowing its intent to harm creditors.
• ▸ Controlling persons of failed capital market institutions. Where a capital market institution is bankrupt or in gradual liquidation, SPK may request the personal bankruptcy of shareholders holding more than ten per cent directly or indirectly, and of serving or former directors and signatory managers, whose responsibility has been established under Capital Markets Law Art. 97 (Art. 98(1)).
• ▸ The criminal route. The Turkish Penal Code punishes fraudulent bankruptcy, where a person makes fraudulent dispositions reducing assets and bankruptcy is declared, with imprisonment of three to eight years (Art. 161), and negligent bankruptcy with two months to one year (Art. 162). Both require a bankruptcy decision. Where a criminal case is opened, the investor’s participation and file access are explained in Joining a Criminal Case in Turkey as a Foreign Investor.

This guide does not suggest that any company connected with the 2026 cases is insolvent or that any person has committed an offence. Investigations are ongoing and the presumption of innocence applies.

Practical points for foreign creditors

Turkish insolvency procedure does not distinguish between domestic and foreign creditors in ranking: Art. 206 ranks claims by their nature, not by the creditor’s nationality. In practice, however, foreign creditors are exposed to particular risks.

• ▸ Deadlines run from announcements. The seven-day objection (İİK Art. 288(2)), the fifteen-day concordat filing period (Art. 299), the one-month bankruptcy registration period (Art. 219(2)), the fifteen-day schedule challenge (Art. 235(1)) and the one-month lawsuit after confirmation (Art. 308/b) all run from publication in Turkey. Monitoring must be continuous.
• ▸ Extensions are discretionary. The bankruptcy registration period may be extended for creditors abroad (Art. 219(2)), but this should be requested early, not assumed.
• ▸ Address for service. Giving an address in Turkey, normally the lawyer’s, and paying the advance under Art. 223(3) ensures that the bankruptcy administration’s decisions are served and that challenge periods run from service.
• ▸ Documents. Powers of attorney, corporate documents and evidence executed abroad need apostilles and sworn translations. These take time and should be prepared before a deadline starts to run; see Obtaining and Preserving Evidence.
• ▸ Security for costs. A foreign claimant who brings a lawsuit in Turkey, such as an action against the schedule of claims, may be required to provide security for costs, unless exempted on the basis of reciprocity (Law No. 5718 Art. 48). Whether reciprocity exists must be checked for the claimant’s state; see Suing in Turkey or Abroad.
• ▸ Coordination with other creditors. Majorities in a concordat are calculated by both headcount and amount. Investors with similar claims can coordinate their filings, objections and votes; options for joint action are discussed in Can Foreign Investors Bring a Class Action in Turkey?

A first-month action plan

1. 1. Map exposures. List every damages claim, bond, share position and asset held at intermediaries in the affected group, with the legal entity concerned.
2. 2. Set up monitoring. Arrange daily checks of the Trade Registry Gazette, the official advertisement portal and public disclosures for concordat, bankruptcy and SPK measures.
3. 3. Prepare documents in advance. Powers of attorney with apostilles, corporate certificates, trade records and loss calculations, translated.
4. 4. Decide on objection. If a provisional moratorium is announced, review the plan, comparison table and audit report and decide within seven days whether to object (İİK Art. 288(2)).
5. 5. File the claim. Within fifteen days of the commissioner’s announcement in a concordat (Art. 299), or one month of the bankruptcy announcement (Art. 219(2)), with full evidence.
6. 6. Ask for information. Request information from the commissioner on progress and the debtor’s finances (Art. 290(2)(f)); consider seeking a seat on the creditors’ committee (Art. 289(4)).
7. 7. Protect guarantees. Before voting for a plan, take the steps in Art. 303(2) for co-debtors and guarantors.
8. 8. Reconcile custody positions. Where an intermediary is affected, reconcile positions with the custodian and Central Registry records and follow SPK and YTM announcements; diarise the one-year YTM claim period (Capital Markets Law Art. 85(1)).
9. 9. Identify other defendants. Directors, auditors, guarantors, related parties and recipients of assets.

Deadlines

Frequently asked questions

What is a concordat in Turkish law?

A court-supervised procedure in which a debtor that cannot pay, or risks being unable to pay, its debts obtains a moratorium and proposes a plan to pay them with extended maturities or reductions. The plan binds creditors once accepted by the statutory majorities and confirmed by the commercial court (Enforcement and Bankruptcy Law Arts. 285, 302, 305 and 308/c).

Can a creditor apply for a concordat against the debtor?

Yes. Any creditor entitled to request the debtor’s bankruptcy may ask, by reasoned petition, that concordat proceedings be opened, but it must bear the cost of preparing the required documents (Arts. 285(2) and 287(2)).

How long can a concordat moratorium last?

The provisional moratorium lasts three months, extendable to five (Art. 287(4)). The definitive moratorium lasts one year, extendable by up to six months (Art. 289(3) and (5)), and the court may continue its effects for up to six more months while it decides on confirmation (Art. 304(2)).

Can I object to a provisional moratorium?

Yes, within a definitive period of seven days from the announcement, by petition with evidence that no circumstances justify a moratorium (Art. 288(2)).

Does a concordat stop my damages lawsuit against the issuer?

Article 294 stops enforcement proceedings and the execution of interim injunctions and precautionary attachments; it does not, in its terms, stop lawsuits on the merits. A judgment cannot, however, be enforced during the moratorium. In a bankruptcy, by contrast, pending lawsuits are stayed until ten days after the second creditors’ meeting (Art. 194).

What happens to a precautionary attachment obtained before the concordat?

It cannot be executed during the moratorium (Art. 294(1)). When the concordat becomes binding, attachments made in proceedings started before the provisional moratorium and not yet converted into money fall away (Art. 308/ç).

How long do I have to file my claim in a concordat?

Fifteen days from the commissioner’s announcement. Creditors who do not file are not admitted to the negotiation of the plan unless their claims are recorded in the debtor’s balance sheet (Art. 299).

What majority is needed to approve a concordat plan?

More than one half of registered creditors and more than one half of registered claims, or more than one quarter of creditors and more than two-thirds of claims (Art. 302(3)).

Does interest keep running during a concordat?

No, on unsecured claims it stops from the definitive moratorium, unless the confirmed plan provides otherwise (Art. 294(3)). In a bankruptcy, interest continues but is paid only after principal (Art. 196).

How long do I have to register a claim in a Turkish bankruptcy?

One month from the announcement; the period may be extended for creditors abroad (Art. 219(2)). Late claims are accepted until closure, at the creditor’s cost and without a share in distributions already decided (Art. 236).

Where do investors’ damages claims rank in a bankruptcy?

Unless secured or made privileged by a special law, in the fourth rank with all other non-privileged claims, sharing pro rata after higher ranks are paid in full (Arts. 206 and 207).

How do I challenge the schedule of claims?

By a lawsuit before the commercial court where the bankruptcy was declared, within fifteen days of the schedule’s announcement, or of service for a creditor that gave an address and paid the advance under Art. 223(3); an objection only to rank goes to the enforcement court by complaint (Art. 235).

Are my securities at a failed Turkish broker part of its bankruptcy estate?

No. Investors’ cash and capital market instruments held at investment firms are kept separately and cannot be included in the firm’s bankruptcy estate or attached for its debts (Capital Markets Law Art. 46(5)–(6)).

How much does the Investor Compensation Center pay?

Up to a ceiling per investor set by law at one hundred thousand Turkish lira and increased each year by the revaluation rate, covering all claims against the same firm; it does not cover losses from price movements or investment advice (Art. 84(2) and (5)). The claim must be made within one year of the announcement of the compensation decision (Art. 85(1)).

Can creditors sue the directors of a bankrupt company?

Yes. The bankruptcy administration first decides whether to claim compensation for the company’s loss; if it does not, any shareholder or creditor may sue, and the proceeds go first to the creditors who sued (Commercial Code Art. 556). Claims the estate does not pursue can also be assigned to a creditor under Enforcement and Bankruptcy Law Art. 245.

Related guides

• Turkey’s 2026 Fund and Market Manipulation Crisis: Legal Guide for Foreign Institutional Investors — the entry point to this series
• Trading Halts, Watchlist Market and Delisting on Borsa Istanbul
• Social Media Manipulation and Unlicensed Investment Advice in Turkey
• Turkish Bond Defaults: Bondholders’ Boards and Enforcement
• Continuous Disclosure in Turkey: Inside Information and Delayed Disclosure
• How a Securities Lawsuit Proceeds in Turkey
• Limitation Periods for Investor Claims in Turkey
• Concealed Profit Transfers and Controlling Shareholder Liability
• Claims Against Brokers, Custodians and Portfolio Managers in Turkey
• Freezing Assets in Turkey for Investor Claims
• Suing Directors and Auditors of Turkish Listed Companies
• Calculating Damages in Turkish Securities Claims
• Obtaining and Preserving Evidence in Turkey for Securities Claims
• Turkey’s 2026 Fund Liquidation
• Prospectus and Disclosure Liability in Turkey
• Joining a Criminal Case in Turkey as a Foreign Investor
• Can Foreign Investors Bring a Class Action in Turkey?
• Suing in Turkey or Abroad: Jurisdiction and Enforcement
• Shareholder Rights in Turkish Listed Companies