Recent Developments
The Banking Regulatory and Supervisory Authority (the “BRSA”) distributed to the members of The Turkish Banks Association (the “TBA“) an amendment regulation (the “Draft Regulation“) to the Regulation Regarding the Restructuring of Debts Owed to the Financial Sector (the “Regulation“) on November 1, 2018.
What’s New?
If the Draft Regulation is published in its current iteration:
- Foreign financials institutions providing loans to Turkish debtors will be able to participate in the financial restructuring process without being subject to the approval of the creditors’ majority or any other conditions. Framework agreements will determine related principles and procedures.
- Turkish banks, financial leasing companies, finance companies, factoring companies, capital markets institutions, insurance and reinsurance companies, payment services and e-money institutions and system operators will not be able to apply for financial restructuring as debtors.
- The statute of limitation will not be suspended with the execution of the financial restructuring agreements.
Conclusion
International financial institutions have shared their concerns about the Regulation and the Draft Law Regarding the Restructuring of Debts Owed to the Financial Sector. The Draft Regulation is answering these concerns to a certain extent.
Furthermore, as the principles and procedures on the participation of foreign financial institutions in financial restructurings will be determined by the framework agreements, it is expected that the framework agreement prepared by the TBA which entered into force upon the BRSA’s approval will be amended.
