Executory contracts in insolvency: The Turkish perspective

Abstract

The most important reform made in the insolvency and restructuring area in Türkiye was the renewal of the composition proceedings in 2018. This recent reform has made composition proceedings a leading restructuring tool available to distressed businesses in Türkiye. The changes made in the composition proceedings were aimed at rescuing distressed businesses and protecting them from bankruptcy. Perhaps the most important of the changes made in this regard was the regulation of the fate of the contracts to which the debtor is a party. Previously, the treatment of executory contracts and ipso facto clauses was regulated by general contract law provisions. Although the previous regulations were mostly designed in compliance with the requests and suggestions of financial institutions, the most striking point in the recent reform process was the active participation of scholars and insolvency practitioners. However not all modern restructuring and insolvency principles are available to parties or accepted in the Turkish restructuring and insolvency framework and, therefore, harmonization is still in progress.