Experts warn of abuse of bankruptcy suspension condition as applications soar in Turkey
ISTANBULMore than 1,000 companies have sought to have their bankruptcy proceedings suspended since the beginning of 2015, but experts warn that the misuse of the condition could lead a domino effect in the economy.
The head of the tax division in KPMG Turkey, Abdulkadir Kahraman, noted that the suspension of bankruptcy was a method for companies experiencing financial difficulties to recover their losses and improve their condition.
“There is, however, a huge rise in the applications for the suspension of bankruptcy across Turkey. Unless such applications can be managed efficiently, the cash flow of even companies with good financials will collapse, creating a domino effect across many sectors,” he said in a written statement on May 30.
Kahraman said that over 1,000 companies had filed for a suspension of bankruptcy from the beginning of 2015 until the present.
The Banks’ Association of Turkey (TBB) recently warned that bankruptcy suspension decisions were being approved by relevant authorities with only the most perfunctory of reviews.
“In practice, it is widely seen that many courts order the bankruptcy suspension in a very short time only by looking at the company financials rather than asking for a detailed and realizable improvement plan. This situation, however, creates non-advantageous conditions for the borrowing companies, as they cannot find any way to charge their receivable debts. In order to prevent negative ramifications of this across the whole economy, the whole process needs to be improved by including experts and trustees with higher qualities into the process,” he said.