New amend­ments to the fi­nan­cial re­struc­tur­ing reg­u­la­tion

Dünya Executive - - BUSINESS BY LAW - MUHSIN KESKIN, PART­NER ESIN AT­TOR­NEY PART­NER­SHIP [email protected]

The Bank­ing Reg­u­la­tory and Su­per­vi­sory Author­ity (BRSA) has amended the Reg­u­la­tion on the Re­struc­tur­ing of Debts Owed to the Fi­nan­cial Sec­tor The Amend­ment en­tered into force with its pub­li­ca­tion on the Re­peat­ing Of­fi­cial Gazette No. 30886/1, dated Septem­ber 12, 2019.

What’s New?

The Amend­ment brings the Reg­u­la­tion in line with Pro­vi­sional Ar­ti­cle 32 of the Bank­ing Law No. 5411, which en­tered into force ear­lier this year and is the ba­sis for fi­nan­cial re­struc­tur­ings. In ac­cor­dance with the Pro­vi­sional Ar­ti­cle, the def­i­ni­tion of “cred­i­tor” also in­cludes non-res­i­dent banks and other fi­nan­cial in­sti­tu­tions that di­rectly ex­tended loans to a Turk­ish res­i­dent bor­rower; multi­na­tional banks and in­sti­tu­tions that di­rectly in­vested in Turkey; SPVs es­tab­lished by these in­sti­tu­tions to col­lect re­ceiv­ables; and in­vest­ment funds es­tab­lished for this pur­pose. As also set forth un­der the frame­work agree­ment, non-res­i­dent banks and other fi­nan­cial in­sti­tu­tions that di­rectly ex­tended loans to a Turk­ish res­i­dent bor­rower, multi­na­tional banks and in­sti­tu­tions that di­rectly in­vested in Turkey can join the frame­work agree­ment with­out be­ing sub­ject to the con­sent of the cred­i­tors or any de­ci­sion quo­rum.

The Amend­ment clar­i­fies that the pur­pose of fi­nan­cial re­struc­tur­ings is to en­able debtors to re­gain their abil­ity to re­pay their debts within a rea­son­able time. Any fi­nan­cial re­struc­tur­ing con­ducted with­out this ob­jec­tive will not fall within the scope of the Reg­u­la­tion and the frame­work agree­ments. Ac­cord­ingly, these trans­ac­tions will not ben­e­fit from tax ex­emp­tions and as­sur­ance in respect of em­bez­zle­ment and pro­vided for re­struc­tur­ings un­der the frame­work agree­ment. Any fi­nan­cial re­struc­tur­ings con­ducted out­side of the frame­work agree­ment ex­e­cuted be­fore the Pro­vi­sional Ar­ti­cle’s en­try into force will not be within the scope of the Reg­u­la­tion and the frame­work agree­ments. There­fore, those fi­nan­cial re­struc­tur­ings will not ben­e­fit from as­sur­ance in respect of em­bez­zle­ment or from the tax ex­emp­tions.

Lastly, all in­for­ma­tion re­lated to the fi­nan­cial re­struc­tur­ing process and the debtors will be sub­mit­ted to the BRSA upon its re­quest.

Con­clu­sion

The Amend­ment brings the Reg­u­la­tion in line with the Pro­vi­sional Ar­ti­cle and the changes that have been made to the frame­work agree­ment since Au­gust 2018.

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