Concordat is a court-approved agreement made with the creditors of companies that have difficulty paying their debts and are experiencing financial difficulties. Thanks to these agreements, companies have the opportunity to protect themselves from bankruptcy and continue their operations by restructuring their debts.
Concordat Types:
Non-bankruptcy concordat: It is a concordat that is applied before bankruptcy and has a bankruptcy preventive nature.
Post-bankruptcy concordat: It is the payment plan presented by the debtor to his creditors after the bankruptcy proceedings are initiated and the approval of this plan by the court.
Who Can Request Concordat?
Any debtor who is unable to pay his debts when they become due or is in danger of not being able to pay them when due.
Debtors subject to bankruptcy in order to prevent bankruptcy before they become bankrupt.
Insolvent debtors who wish to submit a payment plan to their creditors after becoming bankrupt.
How to Apply for Concordat?
The application for concordat is made to the competent Commercial Court of First Instance. The application petition must include the financial situation of the debtor, the amount and maturity of his debts, the list of creditors and the concordat proposal. In addition to the application, the concordat expense advance must also be deposited to the court.
Concordat Process:
The concordat process begins with the court giving a temporary respite decision. At this stage, the debtor’s assets are preserved and the concordat proposal is notified to the creditors. Creditors evaluate the offer and present their opinions to the court. The court approves or rejects the concordat proposal, taking into account the opinions of the creditors.
Conditions for Benefiting from Concordat:
The debtor must be in good faith and the concordat offer must respect the rights of the creditors.
The debtor has the financial power to pay the concordat debts.
The concordat proposal is accepted by the majority of creditors.
Benefits of Concordat:
It provides the opportunity to continue your activities while being protected from bankruptcy.
You can pay your debts more easily by restructuring.
You can protect your business reputation by reconciling with your creditors.
Disadvantages of Concordat:
You will be subject to the supervision of the concordat commissioner for a certain period of time.
Some of your assets may be seized.
Your registration in the concordat registry will appear in your job postings and in the trade registry gazette for 5 years.
Things to Consider About Concordat:
Before applying for concordat, it is important that you consult a lawyer and know the legal process well.
The concordat proposal must take into account the rights of creditors and be realistic.
It is important that you pay your concordat debts on time and comply with your concordat obligations.