Postponement of capital companies and cooperatives' bankruptcy and re-organization through conciliation

ankruptcy Code in our country.Individual execution procedure being subject of Execution law can be appliedagainst debtors as well as collective execution procedure that is bankruptcyprocedure can also be applied in case of debtors being subject tobankruptcy.In chapter one of our study bankruptcy of capital companies andcooperatives is examined and chapter two and three examine the institutionof ?defer of bankruptcy? and reorganization by means of reconciliation? onlyapplicable in case of capital companies and cooperatives in order to enablecontinuation of economic lives of capital companies and cooperatives whichare to go bankruptcy pursuant to current regulation while their financialconditions are likely to be recovered through recovery of their financialconditions.According to generally accepted opinion, companies incorporated,companies limited and mixed-liability companies having divided capitalshares are deemed as capital companies. Capital companies andcooperatives are entities subject to bankruptcy and it is likely to applybankruptcy against them due to any and all payables thereof.Debt Collection and Bankruptcy Code of our country specifies threebankruptcy ways. One of them is ordinary bankruptcy specified under articles155-166 of the same code and the other one is bankruptcy regardingexchange bonds specified under articles 167-176 of the same code and thethird one is direct bankruptcy specified under articles 177-181.The institution of defer of bankruptcy studied under chapter two ofthe study is specified under articles 179 and 179b of the Debt Collection andBankruptcy Code(DCBC). The case of debts in excess of current assets(article 179/1 of DCBC) is applied as ground for direct bankruptcy for capitalcompanies and cooperatives. The administration and authorized persons ofthe capital company in such case or the creditors of the company may submitto the court an improvement project stating that it is likely to improve financialsituation of the company or cooperative and request deferral of thebankruptcy. If the court reaches the opinion that the project is serious andreasonable, it may decide to defer the bankruptcy. Deferral period ismaximum one year. However, this period can be extended in the durations tobe approved by the court considering the reports submitted by the trustee upto four years. No new action shall be made for debtor during deferral periodexcept for pledged receivables and creditors listed in the number one underarticle 206 of DCBC and also the initiated actions shall be suspended.In case of disapproval of the bankruptcy deferral or in case the courtbelieves that improvement has not been not likely at the end of deferralperiod or is not likely during deferral period, the court decides on bankruptcyof company or cooperative(Article 179/b,5 of DCBC).The last chapter of the study examines the ?reorganization of capitalcompanies and cooperatives through reconciliation? specified under article309/m of DCBC put into effect in the law system of the country with Law no.5092 and grounds for arrangement. A capital company or cooperative who isin case of not capable to pay its due and payable debts or whose assets andreceivables are not sufficient to satisfy the debts or who is highly likely toencounter either case may apply for reorganization through reconciliation tofirst instance court of trade located in place where action is initiated with theirreorganization project negotiated by creditors and agreed with requiredmajority thereof in advance. If the reorganization project is approved by thecourt, conditions of the project shall prevail over all provisions of allagreements made with creditors affected from the project (article 309/r,1,DCBC). Banks and insurance companies may not apply for this procedure inthe capacity of debtor (article 309/t.3 of DCBC).This regulation aims to enable capital companies and cooperativesto continue their activities upon reconciliation with their creditors andadaptation of their debts and reorganization, if required, to the conditions.