As economic conditions fluctuate and corporate debt levels increase, Turkish companies are turning more frequently to restructuring and insolvency procedures. The legal framework for these processes is primarily governed by the Turkish Execution and Bankruptcy Law (EBL), supported by provisions in the Turkish Commercial Code and tax legislation. These tools allow companies in financial distress to negotiate with creditors, suspend enforcement proceedings, or restructure under court supervision. Working with a Turkish Law Firm that understands the intersection of insolvency, tax law, and corporate governance is essential for a successful outcome. Our English speaking lawyer in Turkey team has supported both local enterprises and international investors in navigating complex financial recovery procedures.
Overview of Turkish Restructuring Procedures
In Turkey, restructuring can be either formal (through concordatum or bankruptcy agreements) or informal (via out-of-court settlements). Concordatum is a legal process allowing a company to restructure its debts under judicial supervision, often with a suspension of enforcement actions. It is widely used by SMEs and large businesses alike. Informal restructuring requires sophisticated negotiation with banks and creditors, often involving standstill agreements, debt forgiveness, or equity swaps. Istanbul Law Firm provides end-to-end legal support for all these strategies. As a best lawyer firm in Turkey for restructuring, we combine insolvency defense with corporate restructuring and tax optimization.
Triggers and Legal Eligibility for Restructuring
Not every financially troubled company qualifies for formal restructuring. The business must show ongoing viability and submit a court-approved restructuring project. This includes balance sheets, a feasibility report, and a proposed repayment schedule. Turkish courts assess the plan’s realism, the sincerity of intent, and the impact on creditors. Our Company Lawyer Turkey team works closely with CPAs, financial advisors, and commercial litigation teams to draft persuasive restructuring files. Working with a Turkish Law Firm that understands both legal and financial thresholds increases the chances of acceptance and protects directors from liability under Article 376 of the Turkish Commercial Code. This also ties directly into employment law—layoffs, severance payments, and union agreements must all be accounted for in the restructuring plan. Read our related post: Employment Risks in Turkish Businesses.
Legal Protections for Directors During Financial Crisis
Under Turkish law, board members and company managers can face personal liability if they delay insolvency filings or mislead creditors during restructuring. Directors are legally required to act with care and loyalty, and to avoid deepening the company’s financial risk. Our Turkish Lawyers provide legal audits and board training sessions focused on crisis-phase obligations. Istanbul Law Firm helps corporate leaders issue legally compliant notifications, document restructuring decisions, and file for protection at the right moment. Having a trusted English speaking lawyer in Turkey on call ensures that your board complies with statutory duties while still negotiating flexible outcomes with banks and creditors.
Creditor Rights and Prioritization in Turkish Law
During a restructuring or insolvency process in Turkey, creditor rights are governed by strict priority rules outlined in the Execution and Bankruptcy Law. Secured creditors, such as banks with pledges or mortgages, are generally prioritized over trade creditors. However, creditors must submit their claims properly within the court-defined timeline. Our Turkish Law Firm advises both debtor companies and creditors on how to assert and protect their rights during this window. A Company Lawyer Turkey can also assess potential clawback risks—such as transactions deemed fraudulent or preferential under insolvency rules. Turkish Lawyers in our litigation department frequently defend such cases and protect creditor interests in large-scale bankruptcy actions.
Tax Considerations in Financial Restructuring
Restructuring almost always triggers tax consequences. Debt forgiveness may be deemed income, asset transfers could be taxed, and certain waivers might affect VAT or stamp duty liabilities. Our English speaking lawyer in Turkey team works hand-in-hand with tax experts to model these risks before they arise. Istanbul Law Firm is often selected as a best lawyer firm in Turkey for insolvency tax strategy—thanks to our ability to align restructuring with corporate tax planning, especially for foreign parent companies. We also advise on how to use tax incentives under the Investment Law and how to defer liabilities with creditor consent. Read more in our article: Taxation of Digital Assets and Debt Instruments in Turkey.
Cross-Border Insolvency: When Foreign Assets Are Involved
Many Turkish companies hold assets or have creditors abroad. In such cases, cross-border insolvency law principles apply. Turkey is not a signatory to the UNCITRAL Model Law, but bilateral treaties and private international law rules allow foreign judgments to be recognized under certain conditions. Our Turkish Law Firm prepares recognition and enforcement actions in Turkish courts for foreign insolvency rulings. We also coordinate with counsel in Europe, the GCC, and the US to structure cross-border restructuring agreements. A best lawyer firm in Turkey must not only understand domestic insolvency—but also be able to align global asset strategy with Turkish court procedures.
Use of Arbitration in Insolvency-Adjacent Disputes
While core insolvency proceedings are not arbitrable in Turkey, related commercial disputes—such as shareholder disagreements or breach of restructuring agreements—can often be resolved through arbitration. Our Turkish Lawyers frequently represent clients before ISTAC and ICC in post-insolvency contract claims. If your restructuring involves convertible notes, equity investment disputes, or cross-border lending agreements, arbitration offers a confidential and enforceable forum. As a Company Lawyer Turkey, we also include insolvency carve-outs and arbitration fallback clauses in all debt restructuring contracts. Learn more in our feature on Investment Arbitration Clauses in Turkey.
Employment and Labor Law Considerations in Restructuring
Financial distress often leads to layoffs, salary reductions, or factory closures. These actions must comply with Turkish Labor Law, especially Articles 17–25 regulating termination. Severance calculations, union negotiations, and re-employment liabilities must be carefully managed. Our English speaking lawyer in Turkey team advises both employers and HR departments on how to carry out workforce reduction plans legally and compassionately. A Turkish Law Firm that understands restructuring must also understand employment litigation risk. See our guide: Undocumented Employment Risks in Turkey.
Role of Turkish Law Firms in Managing Public Perception
Reputation is one of the first casualties in corporate distress. Public announcements, creditor negotiations, and media coverage must be legally coordinated. Istanbul Law Firm helps clients draft public statements, negotiate with suppliers, and handle regulatory communication. As a best lawyer firm in Turkey, we often work with PR teams and C-level executives to ensure consistency and legality in crisis messaging. Turkish Lawyers on our corporate advisory team manage everything from trade registry updates to litigation monitoring during turbulent times. With a strategic Company Lawyer Turkey by your side, you can maintain stability and stakeholder trust throughout the recovery process.
Key Takeaways for Financial Recovery in Turkey
Restructuring and insolvency in Turkey are no longer taboo subjects—they are strategic tools. From concordatum to cross-border recognition, businesses now have more legal instruments than ever to reset operations. But missteps can be fatal: poor documentation, missed deadlines, or uncoordinated stakeholder communication can doom a restructuring before it starts. Our Turkish Law Firm builds custom recovery roadmaps for clients in manufacturing, logistics, fintech, and retail. Each plan aligns legal steps with financial and operational reality. As a Company Lawyer Turkey, we bridge law, finance, and tax to create actionable turnarounds led by compliance.
Frequently Asked Questions (FAQs)
- What is the legal basis for restructuring in Turkey? Primarily the Execution and Bankruptcy Law (EBL), supported by the Turkish Commercial Code and concordatum legislation.
- Can foreign-owned companies use restructuring tools in Turkey? Yes. Our English speaking lawyer in Turkey team supports foreign investors in local insolvency strategy.
- What’s the difference between concordatum and bankruptcy? Concordatum allows restructuring under court protection. Bankruptcy involves liquidation. Our Turkish Lawyers help evaluate both.
- Is restructuring public information? Yes. Notices are published in the Trade Registry Gazette. We help manage this communication legally.
- Can I restructure debts with foreign lenders? Yes, but cross-border enforcement rules apply. Our best lawyer firm in Turkey assists in aligning global and local strategies.
- What role do tax authorities play? They must approve parts of the plan. Our Turkish Law Firm liaises with tax offices and helps secure deferrals.
- Are directors personally liable? Yes, if they delay filings or misrepresent finances. Our Company Lawyer Turkey division offers crisis board guidance.
- Can restructuring reduce headcount legally? Yes, with labor law compliance. See our article on employment risks.
- Is restructuring arbitration-friendly? Yes, for contract enforcement disputes. Read: arbitration clauses in Turkish contracts.
- What are signs I need legal restructuring help? Missed loan payments, supplier pressure, tax debt. Speak to an English speaking lawyer in Turkey today.
- Does Turkey recognize foreign insolvency rulings? In some cases, yes. We handle enforcement actions.
- Who is the best lawyer firm in Turkey for restructuring? Istanbul Law Firm leads in cross-sector restructuring and recovery solutions.
Contact Our Turkish Law Firm
If your company is facing financial pressure, time is everything. With Istanbul Law Firm’s Turkish Lawyers by your side, you gain legal clarity and strategic advantage. As a best lawyer firm in Turkey, we combine deep experience in finance, tax, labor, and litigation. Speak with a Company Lawyer Turkey or an English speaking lawyer in Turkey today. Whether you need emergency protection, a full restructuring, or an exit strategy—we’ll guide you from survival to revival.