There is a lot of way to declare bankruptcy for the limited corporation according to the related codes.
BANKRUPTCY PROCESS
The Limited Corporation may apply to The Commercial Court and ask to decide its bankruptcy. The corporation has to apply with a petition to The Commercial Court and have to add its declaration of property which comprises corporation’s all assets and liability statement and corporation’s creditors’ names, domiciles.
As a rule, corporation does not have to ask its bankruptcy, but if the half of corporation’s assets have been levied by its Creditors and the rest of corporation’s assets shall not be enough to pay its arrears, corporation has to ask its bankruptcy.
When The Limited Corporation’s manager asserts that the corporation’s depts are more than its assets and the court ascertains this situation, it’s decided the Corporation’s bankruptcy. Insofar, one of corporation creditors may ask to deferment the bankruptcy by adducing evidence which contains redevelopment plan. If the Court recognizes the redevelopment plan serious and persuasive, The Court can delay bankruptcy.
THE LEGAL RESULTS OF BANKRUPTCY
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The Regal Results Of Bankruptcy In Terms Of Corporation
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Consist of the bankrupt’s estate
The Bankrupt’s all properties and rights get into bankrupt’s estate by declaration bankruptcy.
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By declaration bankruptcy, Bankrupt’s power of disposition about all properties and rights in bankrupt’s estate does put under restraint
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Executions by creditors against bankrupt hold and decline
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Holding the common pleas
All the suits against bankrupt hold still with opening of bankruptcy until 10 days after the Second Creditors Meeting. Meanwhile, these suits don’t hold stil with opening of bankruptcy. (Urgency cases, ex delicto cases, foreclosure cases)
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The Regal Results Of Bankruptcy In Terms Of Creditors
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Bankruptcies arrears do declare payable
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The interest contunies to run for corporation’s debts
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The conditional debts can be written to the bankrupt’s estate
LIQUIDATION PROCESS
When The Commercial Court decides Corporation’s bankruptcy after corporation ask for its bankruptcy, the decision of bankruptcy is delivered bankruptcy office. The Bankruptcy Office immediately makes public this decision of bankruptcy. Furthermore, The Bankruptcy Office delivers the decision of bankruptcy to land register, commercial register, customs and postal administration, The Banks Association of Turkey, local chamber of commerce, chamber of industry, stock exchange, securities and exchange commission, public notaries, the banks, public administration, tax administration, ministry of commerce, ship’s register office, the dept collecting departments and the courts.
The Bankruptcy Office also does keep books for all corporation’s assets and takes preventive measures to prevent to hide assets. (For example, protect corporation’s money and valuable articles, close corporation’s business house and storage, lock away and seal, etc.)
The Bankruptcy Office invites corporation’s creditors and debtors to declare their claim and dept with a second announcement. The Bankruptcy Office also calls corporation’s creditors a meeting with this announcement. (First Creditors Meeting)
In the first Creditors Meeting, six persons nominated to candidate for membership of the bankrupt’s estate. Enforcement Court elects three persons for membership of the bankrupt’s estate. Bankrupt’s estate is composed of these three persons and they liquidate corporation’s assets.
Bankrupt’s estate does all the necessary works for the liquidation until closing of bankruptcy proceedings. Bankrupt’s estate is the legal representative of the bankruptcy assets. The works and cases about bankruptcy assets are prosecuted only by Bankrupt’s estate.
Bankrupt’s estate investigates the creditors’ claim. After the investigation, Bankrupt’s estate denies the claims which are not just. The Creditors who denied their claims by the Bankrupt’s estate may sue and prove their claim at The Commercial Court in 15 days.
Bankrupt’s estate calls accepted creditors a meeting. (Second Creditors Meeting) In this meeting, it’s especially decided how bankruptcy assets should sell.
Bankrupt’s estate sells the bankruptcy assets after second creditors meeting. The selling, in rule, should be sale by auction. If the creditors decide in the second creditors meeting, bankruptcy assets shall be sale by bargain.
The money after the sale of bankruptcy assets is divided to the creditors The money, in rule, should be divided equally, but the money should be paid to the preferred claims in the first instance. According to the Turkish Codes, such as labor, tax and social insurance contributions claims are the preferred claims.
CLOSİNG OF BANKRUPTCY
Bankrupt’s estate gives a final report to The Commercial Court which decide Corporation’s bankruptcy. If The Commercial Court realizes an inaccuracy or a deficiency about handling of the bankruptcy process, The Commercial Court informs the Enforcement Court.
When The Commercial Court realizes the liquidation process is over, it decides closing of bankruptcy and the bankruptcy office makes public “closing of bankruptcy”.
Gökmen Ergür
Attorney at Law