Challenging Bad-Faith Restructuring and Liquidation Procedures of Turkish Companies (2026 Updated Guide)

A Turkish company uses restructuring or liquidation to avoid creditors, transfer assets or defeat foreign investors’ claims. Learn how suspicious transactions, asset transfers and liquidation decisions can be challenged in Turkey.

Corporate restructuring and liquidation are legitimate mechanisms under Turkish law, but they cannot automatically be used as a shield to defeat creditors, minority shareholders, foreign investors or contractual counterparties. Serious disputes arise when a Turkish company begins transferring valuable assets, moving business to related companies, creating questionable liabilities, collecting receivables through another entity or entering liquidation shortly after substantial claims arise. In such cases, the affected party should examine the commercial substance, chronology, corporate approvals, asset movements and persons benefiting from the restructuring rather than focusing only on the formal liquidation documents.

When Does a Restructuring Become Suspicious?

A restructuring deserves closer examination where a company facing significant liabilities suddenly transfers its factory, real estate, trademarks, machinery, customer contracts, inventory or receivables to shareholders, directors or related companies.

The existence of restructuring itself does not establish bad faith. The transactions and their commercial justification must be examined individually.

Liquidation Does Not Automatically Eliminate Existing Debts

Placing a company into liquidation does not ordinarily mean that valid creditor claims simply disappear. Liquidation is a process for terminating the company’s affairs, collecting receivables, satisfying liabilities and distributing any remaining assets according to the applicable legal framework.

Creditors should therefore act quickly when they learn that a debtor company has entered liquidation.

Check the Trade Registry Immediately

The first step should be determining the company’s current corporate status. Relevant questions include whether liquidation has formally begun, who has been appointed liquidator, when the decision was registered and whether corporate representation has changed.

The chronology can become crucial.

Identify the Real Reason for the Restructuring

Ask what changed immediately before the restructuring.

Was a major lawsuit filed? Did a foreign investor demand repayment? Was an arbitral award issued? Did a bank begin enforcement? Did shareholders fall into dispute?

Timing alone does not prove misconduct, but it can help identify transactions requiring investigation.

Examine Asset Transfers Before Liquidation

Review significant disposals occurring before the liquidation decision.

Particular attention should be paid to transfers involving real estate, vehicles, machinery, shares, intellectual property, receivables and substantial inventory.

Related-Party Transactions Require Careful Review

A company may transfer assets to its shareholder, director, parent company, subsidiary, sister company or another business controlled by the same individuals.

Related-party status does not automatically invalidate a transaction, but it can make the commercial terms and valuation especially important.

Was Fair Market Value Paid?

If a valuable asset was transferred shortly before liquidation, determine the sale price and whether payment genuinely entered the company’s accounts.

A contract showing a price is not necessarily sufficient if the purported payment cannot be traced.

Follow the Money

Bank records can be critical.

If a factory was allegedly sold for a substantial amount, determine where the purchase price was deposited, whether it remained with the company and whether it was immediately transferred to shareholders or related businesses.

Look for Business Migration

Sometimes the debtor company’s assets are not formally transferred in one transaction. Instead, its business gradually moves to another company.

Employees, customers, telephone numbers, websites, equipment, inventory and contracts may all migrate to a newly created or related entity.

The economic reality should be documented.

A New Company May Continue the Same Business

The establishment of another company is not unlawful by itself. However, where the original debtor becomes assetless while a related entity continues essentially the same operation, the structure deserves detailed examination.

Corporate records, management overlap, addresses and asset movements can help reconstruct what happened.

Examine Transfers of Receivables

A company approaching liquidation may assign valuable customer receivables to another person or company.

Determine when the assignment occurred, why it occurred, what consideration was paid and whether the assignee is related to management or shareholders.

Intellectual Property Can Be Particularly Valuable

Brands, trademarks, software, domain names, licenses and other intangible assets may represent a substantial part of the business value.

Check whether these assets were transferred before liquidation and whether the company received commercially reasonable consideration.

Review Real Estate Records

Where the company owned valuable land, offices, factories or warehouses, investigate whether those properties were sold, mortgaged or otherwise encumbered before liquidation.

The timing and beneficiary of the transaction can be highly relevant.

Questionable Security Interests Should Be Investigated

A company experiencing financial difficulty may grant mortgages, pledges or other security interests.

The underlying debt, transaction date and relationship between the parties should be examined carefully.

Artificial Debt Creation Can Affect Creditors

Another possible issue is the appearance of substantial new liabilities owed to shareholders or related companies immediately before insolvency or liquidation.

Creditors should determine whether those debts correspond to genuine historical transactions.

Accounting Records Can Reveal the Structure

Ledgers, balance sheets, bank records, invoices and related-party accounts can provide important evidence concerning asset movements and liabilities.

A forensic accounting analysis may be appropriate in high-value disputes.

Corporate Resolutions Should Be Reviewed

Major transactions may require decisions by the competent corporate bodies.

Examine board, shareholder or general assembly resolutions and determine whether applicable procedural requirements were respected.

Minority Shareholders May Have Separate Rights

A minority shareholder facing an abusive restructuring should distinguish shareholder remedies from ordinary creditor remedies.

Depending on the circumstances, disputed corporate resolutions, management conduct, information rights and director liability may require separate analysis.

Directors Cannot Assume Liquidation Ends Their Exposure

Liquidation of the company does not automatically resolve every question concerning directors’ previous conduct.

Where directors allegedly breached duties or caused loss through unlawful transactions, potential personal responsibility should be examined under the applicable legal conditions.

Liquidators Also Have Legal Responsibilities

Once liquidation begins, liquidators assume important responsibilities concerning the liquidation process.

Their conduct should be examined where assets are allegedly concealed, creditor claims are disregarded or distributions occur improperly.

Creditors Should Formally Assert Their Claims

A creditor who learns that the debtor has entered liquidation should not simply wait for the process to finish.

The claim should be documented and asserted through the appropriate procedure, with supporting contracts, invoices, judgments, arbitral awards or other evidence.

Disputed Claims Require Special Attention

The company may deny the creditor’s claim even though litigation or arbitration is pending.

The creditor should evaluate measures necessary to preserve its position during liquidation rather than assuming that the unresolved dispute will automatically prevent completion of the process.

Enforcement Proceedings May Remain Important

Depending on the company’s status and the nature of the claim, enforcement-law remedies may form part of the strategy.

The relationship between liquidation, existing enforcement proceedings and other insolvency procedures should be evaluated case by case.

Fraudulent Asset Transfers May Be Challenged

Turkish enforcement and insolvency law provides mechanisms that may allow qualifying transactions prejudicing creditors to be challenged under the applicable conditions.

The exact remedy depends on the transaction, parties, timing and creditor’s procedural position.

Precautionary Attachment May Be Critical

Where statutory requirements are satisfied and there is a genuine risk that assets will disappear, precautionary attachment may be considered.

Speed can be particularly important when movable assets, receivables or bank funds are being transferred.

Interim Injunctions May Also Be Relevant

Depending on the substantive dispute and requested protection, an interim injunction may be considered to preserve disputed assets or prevent irreversible consequences.

The appropriate provisional remedy depends on the underlying claim.

Do Not Request Asset Freezes Without a Legal Basis

A creditor’s concern about asset dissipation does not automatically justify freezing every asset of a company or shareholder.

Applications should identify the legal basis, claim, risk and assets concerned.

Shareholder Assets Are Not Automatically Company Assets

A limited-liability structure should not be ignored merely because the company cannot pay its debts.

Personal liability of shareholders, directors or related companies requires an independent legal basis.

Separate Legal Personality Remains Important

The fact that several companies belong to the same group does not automatically make each group company responsible for every debt.

The actual transaction, guarantee, undertaking, management conduct and movement of assets must be examined.

Guarantees Can Change the Analysis

Check whether shareholders, directors, parent companies or affiliates provided guarantees, surety arrangements or other security.

A creditor may possess rights against additional parties independent of the liquidation.

Challenge Suspicious General Assembly Decisions Promptly

Where shareholder resolutions form part of the disputed restructuring, applicable challenge periods may be strict.

The date of the resolution and the affected party’s legal standing should therefore be reviewed immediately.

Preserve Electronic Evidence

Emails, messaging records, accounting exports and internal documents may reveal when the restructuring was planned and why particular transactions occurred.

Evidence should be preserved lawfully and in a form capable of later authentication.

Foreign Investors Should Secure Corporate Documents Early

Foreign shareholders frequently discover that access to company information becomes more difficult after a dispute begins.

Copies of corporate records, financial statements, contracts and shareholder communications should therefore be preserved as soon as warning signs appear.

Search for Assets Systematically

A creditor strategy should identify real estate, vehicles, bank receivables, shares, intellectual property, customer receivables and other assets rather than focusing exclusively on the company’s current bank balance.

Cross-Border Asset Transfers May Require Additional Action

If assets or proceeds have moved outside Turkey, enforcement may require proceedings in more than one jurisdiction.

Foreign judgments, arbitral awards, recognition procedures and local asset-preservation rules may become relevant.

Arbitration Does Not Necessarily Prevent Protective Measures

Where the underlying contract contains an arbitration clause, urgent asset-preservation questions should still be examined separately.

The existence of arbitration should not automatically lead the claimant to ignore assets being transferred in Turkey.

Foreign Judgments and Awards Require Enforcement Planning

A foreign creditor holding a judgment or arbitral award should determine what Turkish recognition or enforcement procedure is required before relying on it against assets in Turkey.

Timing becomes especially important if liquidation is already underway.

Evidence of Bad Faith Should Be Concrete

Rather than merely alleging that restructuring was designed to avoid payment, build a chronology showing the debt, dispute, corporate decisions, transfers, recipients, prices and movement of proceeds.

A detailed factual sequence is generally more useful than broad allegations.

Review the Transaction From the Recipient’s Perspective

If assets were transferred to another company, determine who owns and manages that recipient, when it was established and how it financed the acquisition.

This can help reveal whether the transaction had genuine commercial substance.

Consider Expert Valuation

Where the dispute concerns whether assets were sold below value, an independent valuation may be important.

Real estate, businesses, shares and intellectual property may require different valuation methodologies.

Criminal Issues Should Be Kept Separate

Certain conduct involving fraudulent documentation, concealment or other unlawful acts may potentially raise criminal-law questions, depending on the facts.

However, a commercial restructuring dispute should not automatically be characterized as criminal merely because a creditor remains unpaid.

Parallel Proceedings Require Coordination

A high-value dispute may simultaneously involve commercial litigation, enforcement proceedings, corporate actions, provisional measures, insolvency procedures and potentially criminal proceedings.

The strategy should ensure that positions taken in one proceeding do not unnecessarily undermine another.

Can the Liquidation Be Stopped?

There is no universal rule allowing every creditor to stop liquidation merely because a debt is disputed.

Instead, the creditor should identify the specific unlawful transaction, corporate decision, unpaid claim or procedural irregularity and pursue the remedy applicable to that issue.

What If Liquidation Has Already Been Completed?

Completion of liquidation can make recovery significantly more complicated, but it does not necessarily answer every issue concerning omitted assets, unresolved liabilities or unlawful conduct.

The exact registry status and circumstances surrounding completion should be examined urgently.

Evidence Checklist for Foreign Creditors and Investors

The case file should normally include company registry records, shareholder information, financial statements, bank evidence where obtainable, disputed contracts, invoices, corporate resolutions, asset-transfer agreements, title records, enforcement documents, correspondence and a detailed transaction chronology.

Immediate Legal Strategy

When a Turkish company appears to be using restructuring or liquidation to defeat a claim, the affected foreign creditor or investor should immediately determine the company’s registry status, assert the claim formally, identify recent asset transfers, investigate related parties, trace sale proceeds, review corporate resolutions, preserve financial and electronic evidence, evaluate precautionary measures, analyze director and liquidator conduct and coordinate commercial, corporate and enforcement remedies.

Frequently Asked Questions

Can a Turkish company enter liquidation while it owes money to a foreign company?

Yes, the existence of debts does not by itself prevent liquidation. Existing creditor claims must nevertheless be dealt with according to the applicable liquidation framework.

Does liquidation cancel the company’s debts?

No. Liquidation is not simply a mechanism for erasing valid creditor claims.

Can assets transferred before liquidation be challenged?

Potentially, depending on the nature, timing, parties and legal basis of the transaction.

Can a related company buy the debtor’s assets?

A related-party transaction is not automatically invalid, but its terms, consideration and commercial substance may require careful examination.

Can directors be personally liable?

Potentially, where an independent legal basis for director liability exists. Company debt alone does not automatically become a director’s personal debt.

Can shareholders be personally pursued?

Not merely because they own shares. Personal liability requires analysis of the company type, obligation and specific legal basis.

Can a creditor obtain a precautionary attachment?

Potentially, if the statutory requirements are satisfied. The availability of the measure depends on the claim and circumstances.

What if the company transfers its entire business to another group company?

The transaction should be examined for consideration, corporate authorization, business purpose and potential prejudice to creditors.

Can foreign investors challenge liquidation decisions?

Potentially, depending on their legal status, the specific decision and applicable corporate or procedural remedy.

What is the most important first step?

Build a transaction timeline immediately. Identify when the creditor’s claim arose, when restructuring was planned, which assets were transferred, who received them, what consideration was paid and where the proceeds went. This usually reveals which corporate, enforcement and provisional remedies should be examined first.

Client-Focused Legal Support for Corporate Restructuring and Liquidation Disputes

Bad-faith restructuring disputes can involve asset transfers, related companies, shareholder conflicts, director liability, liquidation proceedings, creditor claims, precautionary attachment, interim injunctions and enforcement against corporate assets. Fırat Fesih Kaya Law Office assists foreign investors, international companies and creditors facing restructuring and liquidation disputes involving Turkish companies. Lawyer Fırat Fesih Kaya provides legal assistance in investigating suspicious corporate transactions, protecting creditor claims, challenging disputed corporate actions, seeking provisional protection where legally available and coordinating litigation and enforcement strategies in Turkey.

Phone: +90 312 434 22 22

Mobile: +90 532 769 22 22

Email: info@firatfesihkaya.av.tr

Address: Mevlana Boulevard No:221, Yıldırım Tower, Office No:148, 06520 Balgat, Çankaya, Ankara, Turkey