RESTRUCTURING AND INSOLVENCY: THE POSITION OF CREDITORS IN TURKEY
In order to secure a debt, the most frequently applied method of ensuring an assurance is a mortgage imposed on the immovable property. A mortgage entitles the mortgagee to ensure the foreclosure of the mortgaged property that is registered with the land registry if the debt is not paid when due.
As per Article 881 of Civil Code 4721, any debt that is present or that has not yet arisen, but will probably arise, may be secured with a mortgage.
The amount of security should be indicated in Turkish lira. However, a mortgage may also be imposed in terms of foreign currency by the credit institutions conducting activity both in Turkey and abroad, in order to secure the loans extended in foreign currency or foreign limping standard.
Unless otherwise stipulated in the law an agreement regarding the mortgage should be executed by and between the mortgagee and the mortgagor in the presence of a deed officer in order to impose a mortgage. This mortgage should be registered with the land registry.
The pledge agreement must be executed in writing or in electronic form and registered with the registry. Once registration is complete, the right of mortgage is deemed established.
What is the status of foreign creditors in filing claims?
There is no specific provision on registration of foreign creditors’ claims. Therefore, foreign creditors can register their claims in the same manner as other creditors.
For further details on this, please contact our team.