Developer Bankruptcy and Konkordato in Türkiye: The Buyer's Position

When a Turkish developer enters konkordato, a buyer stops being a contracting party and becomes a creditor in a collective procedure. The commissioner’s public announcement invites creditors to register their claims within 15 days, and a creditor who fails to register is excluded from negotiations on the project unless the claim appears in the debtor’s balance sheet (Article 299 of Enforcement and Bankruptcy Law No. 2004). Because a claim for transfer of title is a non-money claim, the creditor converts it into a money claim of equal value and notifies the commissioner, unless the debtor undertakes performance in kind with the commissioner’s approval (Article 294). Ranking is governed by Article 206: secured creditors take the proceeds of the encumbered asset, and an unsecured refund claim falls into the residual fourth rank.

That is the position in force as at July 2026, and it disappoints most expectations: buyers assume that paying the price makes them owners, or at least preferential creditors, while Turkish law looks at what is recorded in the register and what security the project carries.

What changes when the respite is granted

Konkordato runs before the commercial court of first instance (asliye ticaret mahkemesi). Article 285 allows any debtor unable to pay debts at maturity, or at risk of being unable to, to seek payment by extension or reduction or to avoid probable bankruptcy; a creditor entitled to request the debtor’s bankruptcy may also apply. On a complete application the court immediately grants a provisional respite of three months, extendable by at most two, and appoints a commissioner (Article 287); where success appears possible it grants a definitive respite of one year, extendable by up to six months (Article 289).

Under Article 294 no enforcement may then be commenced against the debtor, pending proceedings stop, and interim injunction (ihtiyati tedbir) and provisional attachment (ihtiyati haciz) decisions are not executed; first-rank privileged claims under Article 206 are the exception, and unless the project provides otherwise interest stops running on unsecured claims from the definitive respite. One misconception is worth correcting: the respite halts enforcement, not civil lawsuits. Secured creditors sit apart — Article 295 lets them start or continue enforcement for realisation of the pledge, but no protective measures may be taken and the pledged asset may not be sold, save exceptionally with the court’s permission.

Registering the claim, and what to claim

Fifteen days is short, and it runs in Turkish, published in Türkiye, to an address that may be years out of date. A copy of the invitation goes to creditors whose addresses are known, and the announcement carries the exclusion warning expressly (Article 299). The content matters as much as the timing: a claim for transfer of title is converted into a money claim of equal value under Article 294 unless performance in kind is undertaken, normally with a schedule of payments and of any penalty or delay compensation accrued before the application — set out in our guide to late delivery of an off-plan apartment.

The project is then voted on. Under Article 302 it is accepted if signed by a majority exceeding half of the registered creditors and half of the claims, or exceeding one quarter of the registered creditors and two thirds of the claims. Only creditors affected by the project vote, and secured claims count only for the portion left unsecured after the Article 298 valuation.

A document that exists neither in the company’s books, nor in the land registry, nor in a bank record is the weakest thing that can be filed in a collective procedure.

The annotation: what it does and does not do

Article 1009 of Turkish Civil Code No. 4721 allows rights arising from a promise to sell (satış vaadi) and from a construction-for-land-share contract to be annotated in the land registry; once annotated, they may be asserted against holders of rights subsequently acquired over that immovable. It is a fence against a later resale, not a pledge, and confers no priority under Article 206.

Two formalities are unforgiving. The promise to sell must be drawn up by a notary in düzenleme form — Article 237 of Code of Obligations No. 6098 validates the sale or promise of sale of an immovable only in official form, and Article 89 of Notaries Law No. 1512 lists it among the transactions executed that way — and the annotation must be requested. Nor is it permanent: under Article 26 of Land Registry Law No. 2644 it is deleted ex officio if five years pass without the sale being completed or a servitude created and registered, a date that goes by quietly in a stalled project. A private written contract signed in a sales office is not a valid promise to sell at all; the checks that catch this before signing are covered in our guide to buying property in Türkiye as a foreigner.

Whether the unit is already registered in the buyer’s name remains the single most decisive fact: a registered owner is not a creditor at all, and the unit is not part of the debtor’s assets. A transfer during the respite, however, needs the court’s permission — Article 297/2 forbids the debtor to transfer or encumber immovables without it and makes breaches void.

Where the buyer ranks, and the one carve-out

Article 206 pays secured creditors from the proceeds of their security, then unsecured claims in rank: employee and maintenance claims first, claims of persons whose assets were left to the debtor’s administration by reason of parental authority or guardianship second, claims privileged by special laws third, all others fourth. A consumer buyer has no special privilege, so the refund claim sits in the fourth rank.

Confirmation under Article 305 is the counterweight: the amount offered must exceed what creditors would likely receive in the debtor’s bankruptcy, be proportionate to its resources, and leave first-rank claims paid or adequately secured. On confirmation the konkordato binds all claims arising before the application, and those arising during the respite without the commissioner’s approval (Article 308/c), but it does not reach first-rank privileged claims, secured claims up to the value of the security, or public receivables under Law No. 6183; any promise made to one creditor beyond the project is void (Article 308/d).

This guide gives no recovery percentages — none is published officially, and what is paid depends on the project and the estate. One route sits outside that calculation: compensation and security within the scope of building completion insurance cannot be included in the bankruptcy or liquidation estate, cannot be attached, and cannot be made subject to interim measures (Article 42/2 of Consumer Protection Law No. 6502).

If the konkordato fails, and what bankruptcy changes

A creditor who is not paid under the project may have it rescinded as regards its own claim (Article 308/e); any creditor may seek complete rescission of a konkordato vitiated by bad faith (Article 308/f); and the court lifts the respite and declares bankruptcy of its own motion where the konkordato cannot succeed or the debtor breaches Article 297 or acts to harm creditors (Article 292), as it does where the project is not confirmed (Article 308). Appeal periods are two weeks (Article 308/a, as amended by Law No. 7499 of 2 March 2024).

In bankruptcy the estate comprises all attachable assets of the bankrupt (Article 184) and later dispositions over them are ineffective against creditors (Article 191). Civil actions are stayed subject to the statutory exceptions (Article 194) — the opposite of the konkordato position; claims are registered within one month of the announcement, extendable for creditors resident abroad (Article 219); the ranking schedule (sıra cetveli) follows within two months of the bankruptcy administration’s election (Article 232); and objections go to the commercial court within fifteen days of its publication (Article 235).

Prevention, fraud, and the point of no return

Before failure the general tools apply: an interim injunction under Article 389/1 of Civil Procedure Law No. 6100, used in practice to block transfer of a disputed property, and provisional attachment under Article 257, which carries liability for any damage if the applicant turns out to be wrong and a security duty — no security is required where the claim rests on a court judgment, and the statute fixes no percentage in any event (Article 259) — plus a seven-day follow-up duty (Article 264). After the respite none of this is executed (Article 294), and earlier attachments lapse once the konkordato binds (Article 308/ç). The avoidance action (tasarrufun iptali davası) under Articles 277 and 280 survives later, subject to a five-year cut-off (Article 284).

Insolvency itself is not a crime. Where deception by fraudulent acts is present, Articles 157 and 158 of Turkish Penal Code No. 5237 apply — basic fraud carrying one to five years’ imprisonment, aggravated fraud three to ten — and both are investigated ex officio, with no complaint requirement; denunciations go to the public prosecutor or law-enforcement authorities, and for offences abroad prosecutable in Türkiye they may be lodged at Turkish embassies and consulates (Article 158 of Criminal Procedure Law No. 5271). The distinctions are drawn in our guides to real estate fraud and remedies and to suing a developer in the Turkish consumer courts.

Developer failure is not an exotic event in a market where most units are sold before completion; it is a risk to be priced before signing. What determines a buyer’s position is not the amount paid but three things: where the right was recorded, which security the project carries, and whether the short deadlines were caught when the announcement appeared. For a file-specific review, see our real estate practice.

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