Turkey Financial Restructuring Framework Agreement In Effect

Although there is no moratorium on the regulatory procedure, since it is not an “insolvency procedure” (which is included in the UK Companies Act 2006), there is no stigma associated with insolvency and there would be no standard insolvency default clause (as might be found in commercial contracts, unlike financial documents). Another important advantage of a regulatory regime is that it is limited to restructuring the financial debt of the troubled company and leaves business transactions and creditors intact. Covid-19 has led to a slowdown in the Turkish economy, as is the case in other major economies, and financial markets expect the Turkish economy to gradually recover in the near future. This particular composition of the arbitration tribunal ensures that disputes cannot be resolved quickly and effectively. An arbitral tribunal, composed of financial law experts and working according to international arbitration standards, is essential to resolve disputes arising from legal relationships as complex and multilateral as financial restructuring. Recommended measures: the entire fund-coated restructuring regime must be revised in order to have a collective effect (with restrictions) on creditors, which would require all banks and financial institutions dealing with Turkish borrowers to be part of the process. Although the effects of a local insolvency procedure in a legal area (for example. B for the cancellation of claims) in another country are not effective, it should nevertheless be possible to adopt such a position through international treaties and, in particular, international recognition of important elements of Turkish insolvency proceedings. – According to the previous AI, at least two creditor institutions and the majority of creditor institutions representing two-thirds of claims may terminate the financial restructuring process if creditor institutions, which represent a quarter of the claims that are not parties to the framework agreement, take legal action against a debtor and do not cease this procedure within 30 days. Chapter 11 and the plans appear to require higher restructuring thresholds (i.e. 2/3 in terms of amount and the majority of the number; 75% of the value and the majority of the number). Both, however, provide for the ability to “push down,” which may force dissenting minority creditors to restructure, including by amortizing debts (a passu bet with willing creditors). However, the large FA does not contain a “cram-down” function, but stipulates that depreciation requires the unanimous agreement of all creditor institutions.

In addition to amortization, the extension of an additional loan requires the agreement of 90% in volume and two per number. On the other hand, it will not be possible to depreciate it on a small scale, and creditor institutions may not be forced to extend additional loans, but they may decide individually. In addition, a private equity swap is used as a restructuring instrument under Chapter 11 and arrangement arrangements. However, the framework agreements do not provide for debt for equity swaps without shareholder consent. These characteristics make it difficult to secure a successful restructuring agreement between debtors and creditors, as it is essential to coordinate the interests of all parties involved. – under large-scale EAs, negotiations on financial restructuring must be concluded within 90 days; However, negotiations may be extended for an additional 90 days, with the agreement of at least two creditor institutions and the majority of creditor institutions representing two-thirds of the receivables.