Financial restructuring framework agreement has been amended

Dunya Executive - - BUSINESS BY LAW - UMURCAN GAGO, PARTNER ALPER ONAR, SENİOR MANAGER PINAR TATAR, SENİOR MANAGER GİZEM SOZENOGLU, SENİOR MANAGER [email protected] GSG Attorneys at Law

On November 21, the Turkish government amended the Regulation on Restructuring Debts Owed to the Financial Sector, in line with the Framework Agreement produced by the Banking Regulatory and Supervision Agency. A protocol, which includes these amendments, has now been shared with banks and financial institutions that have signed the Framework Agreement.

Cond t ons for fore gn banks

The amendment states that the necessary conditions for foreign credit institutions and other international credit institutions involved in the restructuring process will be regulated in the Framework Agreement and that these institutions can participate in restructuring debts on demand (i.e. without requiring the approval or a quorum of credit institutions included in the Framework Agreement). As per the amendment of the Regulation, it is stipulated in the Framework Agreement that foreign credit institutions and other international credit institutions involved in the scope of the Creditor Institutions Consortium (“CIC”) who wish to be involved in the restructuring process may sign the Framework Agreement with reference to the related debtor without the approval or quorum of creditor institutions already signed to the Agreement.

Def n t ons

Foreign credit institutions and other international credit institutions included in the Framework Agreement are institutions authorized to extend loans pursuant to their local regulations. Likewise, a definition for debtor has been included in the Framework Agreement as well.

R ght to end negot at ons

According to new regulation, during the negotiation process of the contract, in case other creditors who are not a party to the Framework Agreement have initiated legal proceedings regarding in excess of 25 percent of the total debt amount and if these proceedings have not been concluding in 30 days (in any case provided that such process does not exceed 150 days starting from the application of the debtor), the contract negotiation may be terminated with a quorum (75 percent of debts and 30 percent of creditors) by creditors who executed the Framework Agreement. In case the contract negotiation is not terminated by creditors, each creditor has the right to discontinue the negotiations.

R ght to term nate contracts

After the execution of the Agreement, in case other creditors who are not a party to it have initiated legal proceedings and if these proceedings have not been concluded in 30 days, the creditors who executed the Agreement have the right to decide to terminate or revise the contract with a certain quorum (75 percent of debts and 30 percent of creditors). If not, each creditor has the right to depart the contract.

Protect on of secur t es

Receivables in factoring transactions and goods relating to financial leasing transactions have

been included to protect securities taken before the beginning of the restructuring process.

Collect ons from new secur t es

With the amendment, in case the institutions included in the CIC grant additional loans, collections from new securities for additional loans shall be used in payment of additional loans. Those who have signed the contract and do not grant additional loans shall not have the right to demand privileged collection on new securities and other collections within the scope of the Agreement.

Foreign credit institutions and other international credit institutions included in the Framework Agreement are institutions authorized to extend loans pursuant to their local regulations.

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