The number of companies declaring concordat in Turkey

One of the most important indicators of the economic difficulty the country is facing is the companies’ declaration of concordat—the restructuring agreement between the debtor and its creditors. This is an issue of debate. 

These debates were flamed again last week when Trade Minister Ruhsar Pekcan said the number of companies that have declared concordat are 356.

There are claims that the number that was announced by the minister during her ministry’s budget talks in the parliamentary commission to be old data.

Pekcan has underlined that they are working on a draft to protect both the debtor and the creditor and said “concordat is an issue that is also monitored by the Justice Ministry. We are providing our views to the ministry. The number of companies that have declared concordat is 356. With 132 in Istanbul, 50 in Ankara, 27 in İzmir, 26 in Kocaeli, 13 in Bursa, 11 in Hatay and nine in Mersin. Together with those in the other 88 provinces, they total 356 in sum.”

The declaration of concordat is published in the Turkish Trade Registry Gazette and the healthiest data can be obtained from this publication. When you go through this year’s gazettes, you can see that only in October, the number of companies declaring concordat are more than the sum of companies that have done so in the first six months of the year.

Operating from this observation, it might be more correct to guess that Pekcan’s number refers to the first 8-9 months of the year before October.

While I could not determine a precise number, it would not be wrong to say the number of companies that have declared concordat this year until recently is twice that of the minister’s number.

Another development that can be observed when you scan the gazettes is that the number that sees a huge increase in October continues with the same speed in the first week of November.

In short, if it goes with the same fast pace, I personally estimate that even if it does not reach a thousand, the number of companies declaring concordat will approach a thousand.

When we look to the business areas of these companies, it is not possible to say something definite about the sectors since very different sectors have been covered in gazettes.

The rise is inevitable

Meanwhile, there is too much criticism about some enterprises abusing the concordat mechanism. As a result of these criticisms, changes to the system have begun to be discussed.

The truth is, no matter how you change the system, unless there is improvement in the current economic environment, it is inevitable for the number of declarations of concordat to rise and for this mechanism to become widely implemented.

Previous experience on bankruptcy postponement and concordat declaration show that once you block that road, this brings it to resort to other ways and the stalemate will continue.

The current economic trend shows that closure of companies and suspension of activities will continue.