Concordat filings skyrocket: Over 1,550 firms seek financial protection in 2024

In a concerning trend, Türkiye has seen a significant increase in concordat filings in 2024, with 1,554 firms seeking legal protection in the first seven months alone.

This rise underscores the mounting economic pressures on various industries, particularly construction, and raises concerns about the potential misuse of the concordat system.

Which sectors report concordat filings most?

Türkiye experienced a sharp increase from the 1,516 filings recorded in the same period last year. Additionally, 55 companies have been declared bankrupt during this time, highlighting the severe financial difficulties faced by many businesses.

• Sector breakdown: The construction sector is the most affected with 398 firms filing for concordat. Textile is the second highest sector, followed by fuel stations.
• Top cities: Istanbul leads with the highest number of filings, while Ankara and Bursa follow closely.

Istanbul Chamber of Industry warns of concordat abuse

Erdal Bahcivan, head of the Istanbul Chamber of Industry (ISO), expressed concerns about the growing use of concordat filings, noting past abuses in 2018 and 2019.

He cautioned that the system might be exploited, benefiting some companies while disadvantaging others. Bahcivan has been advocating for reforms to restrict concordat protections to public and financial debts only, aiming to prevent misuse in the private sector.

A firm might save itself with concordat, but it could also drag hundreds of others underwater. If a company is to be saved, it should be done while also ensuring the survival of its counterparts

Erdal Bahcivan

Example: Mega Polietilen’s filing for concordat

• Mega Polietilen, a significant player in the polyethylene foam industry, was founded in 2005, started production in 2007, and went public in 2012.

• The company, valued at ₺1.28 billion ($37.75 million) with 401 employees as of March 2024, sought this protection to safeguard its assets and continue operations without interruptions due to potential creditor seizures.

• The Bakirkoy First Commercial Court granted a three-month provisional period to manage the company’s financial issues.

• The concordat aims to safeguard the company’s assets and ensure continued production despite potential actions by creditors.
• Ongoing discussions are focused on debt restructuring and capital increase to stabilize the company’s financial position by regulating cash flow and reducing financing costs.