The Banking Regulatory and Supervisory Authority (“BRSA”) issued the Regulation on the Restructuring of Debts Owed to the Financial Sector (“Regulation”), which entered into force with its publication in the Official Gazette dated August 15, 2018 and numbered 30510.
- Pursuant to the Regulation, debtors’ obligations to banks, leasing companies, factoring companies and financing companies (“Creditors”) can be subject to financial restructuring, if the debtors’ financial status and ability of repayment are reviewed and approved by BRSA-authorized institutions.
- Financial restructurings will be completed under the framework agreements (“Framework Agreements“) to be drafted by the Banks Association of Turkey (“BAT”) and approved by the BRSA. The BAT will be authorized to classify creditors according to their credit scale and area of operation in the relevant sector, and to draft different Framework Agreements for each group. The signed Framework Agreements will be subject to the BRSA’s approval and will become valid following the approval. Changes to these agreements will also be subject to the BRSA’s approval.
- Framework Agreements will be implemented with the individual restructuring agreements (“Restructuring Agreement“) to be signed between debtors and Creditors within two years following the Framework Agreements’ signing date. The Framework Agreement will determine the scope of the receivables to be restructured, debtors’ qualifications, minimum contextual requirements of the Restructuring Agreements and other relevant items.
- One of the most significant provisions of the Regulation obliges all the Creditors of a borrower to agree to the restructuring, if the Creditors that at least own two thirds of the concerned receivables sign the Restructuring Agreement.
- When the Restructuring Agreement is signed, the statute of limitation for the Creditor Institution’s receivables which are subject to the contract shall be deemed to have ceased.
- Any dispute arising from the Framework Agreements will be resolved by an arbitration committee consisting of three arbitrators appointed by the BAT.
The Regulation aims at uniforming financial restructuring transactions, thus making them quicker to close.