The Turkish Constitutional Court annulled the provision of the Enforcement and Bankruptcy Law that stipulates the obligation to obtain the consent of the creditors’ board in order to acquire a disposition permit for the debtor who has been granted a grace period during the concordat process, as it does not leave the court the right of discretion in granting this permission and constitutes a violation of the right to property.
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In the application subject to the decision of the Turkish Constitutional Court published in the Official Gazette dated June 06, 2024 and numbered 32568, it was claimed that the phrase of “… and must obtain the consent of the creditors’ committe” in Article 297 of the Enforcement and Bankruptcy Law No. 7101 (“Law”) were contrary to Articles 5, 9, 10, 35, 138 and 140 of the Turkish Constitution and the annulment of the relevant articles of the Law was requested. The relevant article states that during the concordat process, the debtor cannot establish a pledge, become a surety and make gratuitous disposals as of the deadline decision, except with the permission of the court; cannot transfer or encumber its immovable property, movable property that is important for the continuation of the activity of the enterprise and the permanent installation of the enterprise, and the court is obliged to obtain the opinion of the concordat commissioner and the consent of the creditors’ board before deciding on these transactions. In its assessment, the Constitutional Court stated that the balance between the competing interests of the debtor to continue its commercial activities and the creditors to collect their receivables in the concordat process must be protected, and that the obligation of the debtor to obtain the consent of the creditors’ committee in order to carry out the transactions specified in the law may lead to consequences in favor of the creditors and against the debtor in violation of this balance of interests. In addition, the Constitutional Court stated that a fair balance can only be achieved by subjecting the decision of the creditors’ committee to review and granting discretionary power to the judge. In cases where it would be fairer in terms of protecting the interests of the parties to grant the debtor a disposition permit, depriving the court of this assessment and discretionary power may lead to a violation of the right to property. For these reasons, it has been decided that the provision of the Law is contrary to Articles 5 and 35 of the Constitution and the phrase of “… and must obtain the consent of the creditors’ committee.” in Article 297 of the Law should be annulled. The full text of the Decision can be reached through this link. (Only Available in Turkish) |
