A number of Turkish companies are benefiting from a recent easing of bankruptcy regulations, which some unfairly use as a tool to melt down their debt stock, daily Habertürk has reported.
Officials from banks and financial firms have said some companies are using the recent suspension of bankruptcy regulations to create fictional acute debts, extending their original due dates to six or seven years and even having some portions omitted. A number of new legal firms have even reportedly emerged to smooth the process.
The recent regulation postpones for one year the debt of companies granted a bankruptcy suspension, while companies can continue to collect their receivables from other companies.
“This [regulation] has given companies a lifeline. But there are a number of companies with bad intentions,” said Turkey's Banks Association head Hüseyin Aydın, calling for a new regulation to prevent any gaps for exploitation.
“Banks, SMEs, auditing bodies and non-governmental organizations should come together immediately and steps should be taken to ease the burdens of SMEs,” Kadıoğlu said, warning that the problems of SMEs may spread to the wider economy.
Some 484 legal bankruptcy suspension demands were placed in Turkey in 2012, 645 in 2013, and 720 in 2014, before exceeding 1,000 last year.
Boards of trustees are appointed to companies that file for bankruptcy, but 90 percent of such companies in Istanbul in recent years have gone bankrupt anyway.