Post default rights under the Law numbered 6750 on Pledge over Movable Assets in Commercial Transactions

Law on Pledge over Movable Assets in Commercial Transactions numbered 6750 ("Law numbered 6750") has entered into force on 1 January 2017 and repealed the Law on Commercial Enterprise Pledge numbered 1447. Law on Pledge over Movable Assets in Commercial Transactions has the aim of meeting the financial needs of small and medium sized enterprises by extending the registered pledges' scope of application. In order to realize such aim, Law numbered 6750 contains dispositions extending the scope of application of registered pledges in terms of parties to a pledge contract and assets being the subject of a pledge. In order to ensure the frequent application of the Law numbered 6750 setting forth the registered pledges over movables, secured creditors should have a belief for the successful collection of their receivables. Under general principles of the pledge law, in case debtors do not perform their obligations on time, the unique possibility that pledge right grants to the secured creditor is the sale of the pledged asset through compulsory enforcement and collecting the receivable from the sales revenue. However sale through the compulsory enforcement may not always be deemed as an effective and reasonable method. With the Law numbered 6750, secured creditors are granted alternative post default rights enabling to obtain the highest value possible from the secured asset. Under the Law numbered 6750, upon the default of a debtor, a secured creditor may request the ownership transfer of the pledged asset, establish a licence or lease relation on the pledged asset which are not able to be the subject of ownership or possession transfers due to their nature, transfer its receivable to an asset management company or conduct enforcement proceedings in accordance with the general dispositions. The subject of our study is the examination of the post default rights granted to secured creditors under Law numbered 6750 in terms of material law. In accordance with our plan, in the Section I, the scope of application of the Law numbered 6750 in terms of commercial transactions criterion, parties to a pledge contract and assets which may be a subject of pledge contracts is explained. Following such introductive explanations, the notion of default is examined and brief introduction of the post default rights of secured creditors is made. In Section II, transfer of ownership and conducting enforcement proceedings in accordance with the general dispositions, post default rights leading to the transfer of ownership on the pledged assets, are examined in detail. In Section III, licence/lease right and transfer of receivable to an asset management company, post default rights not leading to the transfer of the ownership of pledged asset, are analysed. Section IV, the final section of our study, deals with the termination of pledge rights established under the Law numbered 6750.