Prohibition of the sale by auction of the pledged goods within the period of the concordat

Abstract

To revitalize the concordat process which has lost its importance for various reasons in recent years, some amendments have been made in the provisions of the Turkish Code of Enforcement and Bankruptcy (IIK) by Law No 7101. One of the amendments is to regulate the results of the definitive period in terms of pledged creditors in a separate article (Article 295 of the Turkish IIK). Under the first paragraph of Article 295 of the Turkish Code of Enforcement and Bankruptcy, pledges may initiate debt collection by realising pledged property during the definitive period; but no protection measures can be taken and the sale by auction of the pledged property cannot be realized. Prior to the amendment to Law No 7101, a similar provision was included in the Turkish Code of Enforcement and Bankruptcy Law. However, the prohibition on the sale by auction of pledged goods issued in the new article should be examined within the framework of other articles amended by Law No 7101. In this study, the prohibition of the sale by auction of pledged goods within the definitive period is examined, which has important results in terms of the concordat process. In this study, the purpose and scope of prohibition are taken into consideration in terms of the time period. When considering the scope of prohibition in terms of a person, especially in the case of pledge on the assets of the third party in favor of the concordat debtor, the issue of whether the prohibition of auction by sale applies to the pledged property of the third party was discussed and the opinions of Turkish and Swiss jurists were evaluated. As a result of this study, it was concluded that prohibition also exists for the third party pledged goods.