Risks of Using Liquidation to Evade Responsibility
Voluntary liquidation is governed by Articles 529–548 of the TCC and typically involves the following steps:
- Decision by the general meeting of shareholders/partners.
- Appointment of a liquidator (tasfiye memuru).
- Publication of three announcements in the Turkish Trade Registry Gazette (Türkiye Ticaret Sicil Gazetesi) at weekly intervals.
- A minimum waiting period of six months from the first announcement for creditors to submit claims.
If the liquidation is conducted improperly (e.g., concealment of assets, disregard of known creditors, or fictitious settlement of debts), it may be classified as fraudulent conduct. Liquidators and directors may bear personal liability for damages caused to creditors due to negligence or intent (Art. 553 TCC). In severe cases, criminal liability for fraudulent bankruptcy may also apply.
Recommendations for Preventive Protection of Creditors’ Interests
To significantly reduce risks, European companies are advised to act proactively:
1.Formalising the Debt through Mediation
Since 2019, mediation (arabuluculuk) has been mandatory for most monetary commercial disputes in Turkey (Law No. 7155). Initiating mediation at an early stage is strongly recommended: a settlement agreement reached during mediation has the force of an enforceable title and firmly establishes the debt. Even if mediation does not result in an agreement, the minutes document the debtor’s position (acknowledgment or denial of the debt), substantially strengthening the creditor’s position in subsequent court proceedings.
2.Notification to the Turkish Chamber of Commerce and Industry
While the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and local chambers (Ticaret Odası) do not directly supervise liquidations, they play an important role in company registration and dispute resolution. It is advisable to submit an official letter or complaint to the relevant local chamber or TOBB, explicitly warning about the potential bad-faith nature of the liquidation. Such correspondence creates an important paper trail and may prompt additional scrutiny or facilitate out-of-court negotiations.
Since 2019, mediation (arabuluculuk) has been mandatory for most monetary commercial disputes in Turkey (Law No. 7155). Initiating mediation at an early stage is strongly recommended: a settlement agreement reached during mediation has the force of an enforceable title and firmly establishes the debt. Even if mediation does not result in an agreement, the minutes document the debtor’s position (acknowledgment or denial of the debt), substantially strengthening the creditor’s position in subsequent court proceedings.
2.Notification to the Turkish Chamber of Commerce and Industry
While the Union of Chambers and Commodity Exchanges of Turkey (TOBB) and local chambers (Ticaret Odası) do not directly supervise liquidations, they play an important role in company registration and dispute resolution. It is advisable to submit an official letter or complaint to the relevant local chamber or TOBB, explicitly warning about the potential bad-faith nature of the liquidation. Such correspondence creates an important paper trail and may prompt additional scrutiny or facilitate out-of-court negotiations.
Actions When Liquidation Has Already Been Initiated
If the Turkish company has already entered liquidation:
- Submit claims to the liquidator within the prescribed period (at least one year from the first announcement, though early action is recommended).
- Contact supervisory authorities: the Ministry of Trade (Ticaret Bakanlığı) or the relevant Trade Registry Office to request verification of compliance with procedural requirements.
- File a lawsuit in Turkish courts:
- To annul the liquidation decision (if serious procedural violations or fraud are proven).
- To hold liquidators, directors or shareholders personally liable for damages (Art. 553 TCC).
- To declare the liquidation invalid and reopen the company for additional liquidation proceedings (Art. 547 TCC).
Foreign creditors have the same procedural rights as Turkish ones. Claims are usually brought before the commercial court of first instance at the company’s registered seat.
Conclusion
The liquidation of a Turkish company does not constitute an absolute barrier to debt recovery. Timely fixation of the debt through mediation, proactive communication with chambers of commerce, and decisive court action enable European creditors to effectively counter attempts to evade liability.
Our international legal practice specialises in cross-border disputes involving Turkish counterparties, including debt recovery, challenging liquidations, enforcement of claims against directors, and asset tracing. We provide full representation before Turkish courts and authorities, as well as strategic advice on preventive measures.
For a tailored consultation, please contact us via the details on https://rt-union.com/en.
Respectfully,
Pavel Chukavin
Head of International Practice
Russo-Turkish Law Firm RT-Union
