Turkey’s garment giant, Collezione declares concordat

As economic crises prevail in Turkey, many of the biggest Turkish companies, from all sectors, are continuing to declare concordat.

The new concordat declaration – the restructuring agreement between the debtor and its creditors – came hot on the heels of Turkey’s economic crisis. Collezione, Turkey’s garment giant, is just one of these companies.

Collezione was founded in 1987 and has 120 stores, 132 vendors and 27 sales points. The concordat declaration proves how serious the economic turmoil is in the country. Known as one of the most recognized garment companies in Turkey, Collezione started its business life when its first store opened in one of İstanbul’s elite neighbourhoods, central Bakırköy.

Collezione had already closed 58 stores in 2018 when alarm bells started ringing for the company. Reportedly, the company has been given just three months to smooth out its financial position.

Application to Commercial Court of First Instance for a concordat

Applying to the Bakırköy Commercial Court of First Instance Akyiğit Mağazacılık A.Ş(A.Ş), Collezione declared itself concordat and requested debt relief. Following the completion of the concordat process, Akyiğit Mağazacılık A.Ş gave three days of a term for the company to revise its financial outlook. Haluk Uslu, Burak Uysal and Ali Fatih Uysal were appointed as the temporary commissary delegation by the Bakırköy Commercial Court of First Instance

The number of companies that have declared concordat has, reportedly, reached 3000 across Turkey.

 Abusing the concordat system

Meanwhile, there is much criticism about some enterprises abusing the concordat system. As a result of these criticisms, changes to the system are being discussed.

Unless there is an improvement in the current economic environment, it is inevitable that the number of declarations of concordat will rise and it will become implemented widely.

The current economic trend shows that the closure of companies and suspension of activities will continue.

Changed concordat regime

As reported by CDR News, the provisions of the Law No. 7101 entirely repealing the ‘postponement of bankruptcy’ and amending the provisions of concordat set forth in the Execution and Bankruptcy Law No. 2004 (EBL), was published in Turkey’s Official Gazette on 15 March 2018.

As an alternative to ‘postponement of bankruptcy’, fundamental changes have been made to the procedures and principles of the concordat which were previously found in Turkish law, but which did not have much practice due to commercial reasons and the complexity of the procedure.

Concordat is a special kind of agreement which becomes binding with court approval. It allows debtors to pay their debts by giving them extra maturity or preventing possible bankruptcy of the debtor or the debts are paid to the creditors.

The concordat process consists of five fundamental stages: application to the concordat, temporary relief, definitive relief, creditors’ meeting and the court’s examination and approval on concordat.

Disputes lawyers are now working on temporary relief requirements with accounting experts on both sides of the table as case files have yet to arrive at the stage of definitive relief.

The approach of courts is yet to be fully established. Indeed, certain courts are quite conservative in issuing temporary relief, while others issue it without making any analysis over the requirements and particularly the accuracy of the concordat project and balance sheets which cause incidental objections. Practitioners had envisaged that the abolishment of bankruptcy protection would lower the amount of their work, but the new regime for concordat has already filled the gap.

Below is a list of some giant companies that declared concordat in 2018:

• Gilan
• Hotiç
• Keskinoğlu
• Remoil
• Makro Market
• Mendo
• Dizayn Boru
• Euronet
• Aker İnşaat
• Om-Ar Tekstil
• Nalpas
• Efecan Tekstil
• Smach

Turkey’s Global Textile Brand Karaca Files for Bankruptcy Protection

The post Turkey’s garment giant, Collezione declares concordat appeared first on IPA NEWS.

from IPA NEWS https://ipa.news/2019/01/23/turkeys-garment-giant-collezione-declares-concordat/