Undisclosed Guarantees Found After Buying a Turkish Company: Can the Foreign Buyer Recover Losses? – 2026 Updated Guide

Hidden Guarantees in Turkish Company Sale | Buyer Remedies

Learn what foreign buyers can do after discovering undisclosed guarantees in a Turkish company acquisition, including SPA indemnity, damages, price adjustment and rescission.

A foreign buyer may discover after acquiring a Turkish company that the company issued guarantees for another company’s debt, signed bank guarantee documents or assumed obligations that were not disclosed before closing.

An undisclosed guarantee can expose the acquired company to payment demands, bank enforcement, collateral loss and serious cash-flow problems. The buyer may be able to recover losses from the seller, but the available remedy depends on the acquisition agreement, guarantee documents and the seller’s knowledge.

This 2026 updated guide explains how foreign buyers can respond to undisclosed guarantees discovered after buying a Turkish company.

What Is an Undisclosed Guarantee?

An undisclosed guarantee may include a corporate guarantee, bank guarantee, surety, payment undertaking, counter-guarantee, endorsement, letter of credit exposure or guarantee given for a related company.

The acquired company may have guaranteed the debt of a shareholder, director, affiliate, contractor, customer or another group company.

The guarantee may create liability even if the acquired company never received the loan proceeds. Expiry dates, claim conditions, collateral and continuing obligations must be examined carefully.

Why Does the Acquisition Structure Matter?

In a share purchase, the Turkish company remains the same legal entity after closing. Guarantees issued before closing generally remain obligations of the company.

The foreign buyer usually does not become personally liable merely by acquiring shares. However, the company’s assets and value may be exposed to the guarantee.

In an asset or business purchase, the buyer’s liability depends on which obligations were transferred or assumed and whether the guarantee was connected with the acquired business.

What Should the Foreign Buyer Do Immediately?

The buyer should obtain the complete guarantee file, including the original guarantee, beneficiary, principal debtor, amount, expiry date, collateral, counter-guarantee and demand procedure.

The buyer should determine whether the guarantee has been called, whether a payment demand has been received and whether the beneficiary has started enforcement.

The seller should be notified in writing as soon as possible. The notice should comply with the Share Purchase Agreement and reserve all contractual and legal rights.

Can the Buyer Claim an SPA Indemnity?

An indemnity claim may be available if the acquisition agreement covers undisclosed liabilities, guarantees, bank facilities, related-party transactions or contingent obligations.

The buyer should review the indemnity’s scope, liability cap, deductible, notice deadline, survival period and exclusions.

The indemnity may cover payments made under the guarantee, legal fees, bank charges, expert expenses, interest and other losses if the contractual conditions are satisfied.

Can the Purchase Price Be Adjusted?

A purchase-price adjustment may be possible where the transaction documents contain debt-free, cash-free, contingent-liability or closing-account provisions.

The buyer should calculate the value of the guarantee at closing and determine whether it should have reduced the purchase price.

A valuation or financial expert may be needed to assess the probability of a demand and the potential financial exposure.

Can the Foreign Buyer Claim Damages?

The buyer may seek damages for breach of warranty, concealment, misrepresentation or fraud where supported by evidence.

The buyer should establish that the guarantee existed before closing, was not properly disclosed, fell within the seller’s representations and caused a measurable loss.

Potential losses may include guarantee payments, reduced company value, financing costs, enforcement expenses, legal fees and business interruption.

Can the Acquisition Be Cancelled?

Rescission or cancellation may be considered where the undisclosed guarantee was material and fundamentally affected the buyer’s decision to complete the acquisition.

The buyer may need to prove that the seller knew or should have known about the guarantee and that proper disclosure would have changed the transaction or price.

Cancellation is not automatic and may be difficult after the company has been integrated. Indemnity, damages or price adjustment may be more practical.

What If the Guarantee Was Disclosed Vaguely?

The seller may argue that the guarantee was mentioned in the data room, financial statements or general disclosure schedule.

The buyer should determine whether the information was sufficiently clear to identify the beneficiary, amount, expiry, secured debt and potential exposure.

A general statement that the company had “ordinary bank relations” may not necessarily disclose a substantial guarantee for another company’s debt.

Can the Beneficiary Enforce the Guarantee?

The beneficiary or bank may seek payment if the guarantee is valid and the relevant demand conditions are satisfied.

The acquisition agreement between buyer and seller generally does not bind the beneficiary. The company may need to respond to the demand, challenge the guarantee or negotiate protection with the bank.

The buyer should not ignore a guarantee demand while pursuing a separate seller claim.

Can the Guarantee Itself Be Challenged?

The acquired company may examine whether the guarantee was properly authorized, signed by an authorized representative, limited in amount and duration, supported by valid documentation and used for a lawful purpose.

If the guarantee contains forged signatures, unauthorized commitments or material defects, the company may have grounds to challenge it.

The legal position depends on the document, the beneficiary, the transaction and the evidence.

Can Directors or Shareholders Be Held Liable?

The seller may be liable under the SPA for concealing the guarantee.

Directors or shareholders may face personal liability if they approved an unauthorized guarantee, misused company assets, acted fraudulently or caused damage through independent misconduct.

Personal liability is not automatic merely because an individual controlled the company.

Can the Buyer Recover from a Related Company?

If the guarantee was issued for a related company’s debt, the buyer should investigate whether that company received the benefit and whether it agreed to reimburse the target.

The related company is not automatically liable to the buyer. A claim may depend on a reimbursement agreement, unjust enrichment, fraud or another independent legal basis.

Bank transfers, accounting records and intercompany agreements may clarify the relationship.

Are There Tax and Accounting Consequences?

Undisclosed guarantees may affect financial statements, contingent liabilities, tax reporting and the company’s ability to obtain financing.

The buyer should determine whether the guarantee was recorded correctly and whether related-party arrangements were properly documented.

If the guarantee was concealed through false accounting records, additional civil, commercial or criminal consequences may arise.

Can an Injunction Protect Company Assets?

An interim injunction or provisional attachment may be considered where the seller, related company or other persons are transferring assets or destroying guarantee records.

Urgent protection may also be relevant if the beneficiary is preparing to enforce the guarantee against company bank accounts or property.

The court evaluates urgency, evidence and proportionality. Security may be required.

What Evidence Matters in 2026?

In 2026, electronic banking files, digital guarantee records, cloud data rooms, corporate emails, accounting systems and electronic signatures may be important.

The buyer should preserve the original guarantee, disclosure documents, financial statements, bank correspondence and complete communications with the seller.

A forensic accounting review may determine the guarantee’s financial effect and whether it was intentionally omitted.

Can a Foreign Buyer Act from Abroad?

A foreign buyer does not always need to travel to Turkey. A Turkish lawyer may review the guarantee, notify the seller, respond to the beneficiary and pursue indemnity or damages under a valid power of attorney.

Depending on the issuing country, legalization, apostille and official translation may be required.

Lawyer Fırat Fesih Kaya assists foreign buyers with undisclosed guarantees, SPA disputes, bank enforcement risks, seller indemnities and commercial litigation in Turkey.

2026 Legal Considerations

Foreign buyers should treat guarantees, letters of credit, counter-guarantees and related-party financing as essential due-diligence subjects.

After discovering an undisclosed guarantee, the buyer should protect the company against immediate enforcement while preserving its contractual claim against the seller.

The applicable rules on guarantees, banking obligations, corporate authority, M&A agreements, indemnities, evidence and limitation periods should be reviewed before action is taken.

Frequently Asked Questions (FAQ)

1. Is the foreign buyer personally liable for an undisclosed company guarantee?

Not merely because the buyer acquired shares. Personal liability requires a guarantee, assumption of debt or another legal basis.

2. Does the acquired company remain liable for the guarantee?

Generally, the company remains the same legal entity after a share purchase and may remain bound by the guarantee.

3. Can the buyer claim an SPA indemnity?

Yes, if the SPA covers undisclosed guarantees, contingent liabilities or financial misrepresentations.

4. Can the purchase price be adjusted?

A price adjustment may be possible under the SPA’s debt, liability or closing-account provisions.

5. Can the buyer cancel the acquisition?

Rescission may be considered where the guarantee was material and concealed, but it is not automatic.

6. Can a bank enforce an undisclosed guarantee?

It may do so if the guarantee is valid and the demand conditions are satisfied.

7. Can the guarantee be challenged?

The company may investigate authorization, signatures, amount, expiry, formalities and other legal defects.

8. Can directors be personally liable?

Personal liability may arise from fraud, unauthorized guarantees, misuse of assets or independent misconduct.

9. Can the buyer recover losses from the related company?

Potentially, if the related company assumed reimbursement obligations, participated in fraud or received an unjustified benefit.

10. Can a foreign buyer pursue the seller without traveling to Turkey?

In many cases, yes. A Turkish lawyer may act under a valid power of attorney.

This article is provided for general informational purposes only and does not constitute legal advice. We recommend consulting a lawyer about your specific circumstances to avoid any loss of rights.

Expert Legal Support for Foreign Buyers

An undisclosed guarantee can create substantial financial exposure after a Turkish company acquisition. Immediate document review, bank communication and SPA analysis may protect the buyer’s position.

Fırat Fesih Kaya Law Office provides professional legal support to foreign buyers in hidden-guarantee disputes, M&A indemnities, bank enforcement, price adjustments, damages claims and commercial litigation.

Call: +90 312 434 22 22
WhatsApp: +90 532 769 22 22
Email: info@firatfesihkaya.av.tr
Address: Mevlana Boulevard No:221, Yildirim Tower, Balgat, Cankaya, Ankara, Turkey