Applications by Companies for Postponement of Bankruptcy during the Current State of Emergency Not Permitted
As it is known following the unsuccessful military coup attempt on 15.07.2016, the Turkish government has declared a state of emergency (“SoE”), which came into force upon the announcement in the Official Gazette dated 21.07.2016 and numbered 29777 of a Cabinet Decree to this effect. The SoE continued for a period of 90 days and in accordance with the applicable laws and the duration of SoE was extended for another 90 days as from 19.10.2016.
During the term of the SoE, the Government has been exceptionally entitled to make regulations by way of issuing Decrees in force of Law (“Decree Law”). Following the expiry of the SoE, the Parliament will resume its post as law maker.
The Cabinet’s authority to declare a SoE derives from (I) the Turkish Constitution of 1982, and (ii) the State of Emergency Law No. 2935 (“Law No. 2935”). Although the ongoing SoE in Turkey does not currently hinder daily life and trade activities, Law No. 2935 entrusts the Cabinet with the authority to take appropriate measures as from 21.07.2016 for providing public order and security, which include, by way of example, (i) subjecting the holding of possession to, producing and transferring of, among others, explosive or inflammable materials to prior-permission of the official authorities, (ii) regulating road, sea and air traffic and (iii) prohibiting entry of transportation vehicles into the Turkish territory all together or in part. In principle, these measures would potentially have a negative impact on trade activities and hinder the performance of obligations under commercial contracts. However, the Turkish Government publicly announced before the commencement of the first 90-day period that it would only take measures that relate to the post-coup attempt investigations and the restoration of public security, and that daily life and trade activities would not be impaired.
Of the several measures that have been taken so far within the ambit of SoE, the one which is related to commercial life has been introduced by the Decree Law No. 669 which was published in the Official Gazette on 31.07.2016. According to this Decree Law, for so long as the SoE continues, corporate entities with financial difficulties shall not be able to apply to courts for the postponement of their declaration as bankrupt, a remedy which is otherwise available under the Execution and Bankruptcy Law No. 2004.