Bought a Turkish company and discovered hidden debts afterward? Learn whether foreign buyers can claim compensation from the seller for undisclosed tax debts, lawsuits, bank loans, employee claims, guarantees and other liabilities in Turkey.

Buying an existing company in Turkey can become a serious financial problem when liabilities appear only after the acquisition has been completed. A foreign investor may purchase shares after reviewing financial statements and receiving assurances that the target company has no material undisclosed debts, only to discover months later that the company is facing historical tax assessments, enforcement proceedings, employee claims, unpaid social security obligations, customs liabilities, bank guarantees, supplier debts or litigation originating from periods before the acquisition.

The immediate question is usually: Can the buyer recover these losses from the seller?

Potentially, yes. However, compensation is not automatic simply because a liability was discovered after closing. The buyer’s position will normally depend on the share purchase agreement, representations and warranties, specific indemnities, disclosure documents, seller’s knowledge and conduct, the nature of the hidden liability, causation, limitation periods and evidence showing the financial loss suffered by the buyer.

As of 2026, Turkey’s corporate and contractual framework continues to include the Turkish Commercial Code No. 6102 and the Turkish Code of Obligations No. 6098. The Ministry of Trade’s current legislation list expressly identifies both statutes within the framework governing companies and commercial matters. (Ticaret Bakanlığı)

For foreign investors, the distinction between buying the shares of a company and purchasing selected business assets is particularly important.

What Happens When You Buy Shares in a Turkish Company?

In a share acquisition, the legal entity normally continues to exist.

Its shareholder changes, but the company itself remains the same company.

This means its existing assets and liabilities generally remain within that corporate entity.

For example, assume a foreign investor acquires 100 percent of a Turkish manufacturing company.

Before closing, the company incurred substantial supplier debts.

After closing, those creditors demand payment.

The fact that ownership of the shares changed does not ordinarily make the company’s existing obligations disappear.

This is one reason why pre-acquisition due diligence is critical.

Does the Buyer Personally Become Responsible for Every Company Debt?

Not necessarily.

The company and its shareholder should be distinguished.

For a joint-stock company, the Ministry of Trade confirms that the company is responsible for its debts with its own assets and shareholders are generally responsible only for the capital they have committed to the company. (Ticaret Bakanlığı)

Limited companies have their own liability framework. The Ministry’s 2026 foreign-investor guide states that limited companies are responsible for their debts with company property, while also identifying a specific shareholder exposure concerning uncollectible public debts in proportion to capital shares. (Ticaret Bakanlığı)

Accordingly, the consequences of an undisclosed liability should be analyzed according to the company type and the nature of the debt.

What Is an Undisclosed Debt?

An undisclosed debt can include considerably more than an unpaid invoice.

It may include a liability that existed before closing but was not revealed during negotiations or due diligence.

The liability may already have been payable.

Alternatively, the underlying event may have occurred before closing even though the financial consequence only became apparent afterward.

That second category creates some of the most difficult acquisition disputes.

Example: Historical Tax Assessment After Acquisition

Suppose a foreign investor acquires a company in January.

Six months later, the tax authorities issue an assessment concerning transactions conducted three years before the acquisition.

The company must now defend or pay a liability arising from the seller’s ownership period.

The buyer should immediately review the share purchase agreement.

Was there a tax warranty?

Was there a specific tax indemnity?

Did the seller disclose the historical transaction?

Was an audit already underway?

Did management know about the risk?

These questions can determine whether the buyer has a contractual recovery claim.

Example: Hidden Supplier Debt

Suppose the company’s financial statements show EUR 500,000 in supplier liabilities.

After closing, another supplier demands EUR 300,000 for goods delivered before the acquisition.

The seller never disclosed the obligation.

The buyer should determine whether the debt genuinely existed, whether it was reflected anywhere in the accounting records and what representations were made concerning undisclosed liabilities.

Example: Undisclosed Lawsuit

A seller may state that there is no material litigation against the company.

After closing, the buyer discovers a lawsuit seeking substantial damages that was already pending when the shares were sold.

This can create a strong factual basis for examining warranty or misrepresentation claims, depending on the transaction documents and circumstances.

Example: Employee Claims

Employment liabilities can also appear after closing.

A former employee may bring proceedings concerning unpaid overtime, severance, workplace injury or another historical employment issue.

The fact that the claim was filed after the acquisition does not necessarily mean that the underlying risk arose after closing.

The relevant employment period and alleged conduct must be examined.

Example: Hidden Corporate Guarantee

This is one of the most dangerous forms of undisclosed liability.

Suppose the target company previously guaranteed a EUR 2 million bank loan belonging to another company controlled by the seller.

The borrower was performing normally when the acquisition occurred, so no payment appeared on the target company’s balance sheet.

After closing, the borrower defaults.

The bank then seeks payment from the acquired company.

The buyer may suddenly discover a substantial liability that was never reflected in the acquisition price.

Why Representations and Warranties Matter

The share purchase agreement is usually the first document examined after hidden liabilities are discovered.

Representations and warranties are contractual statements concerning the target company and transaction.

For example, the seller may warrant that the financial statements fairly present the company’s financial position or that no material liabilities exist other than those disclosed.

The exact language matters enormously.

A broad statement and a narrowly qualified warranty can produce very different outcomes.

Financial Statement Warranties

Many acquisition agreements contain representations concerning the accuracy of financial statements.

If a substantial liability existed but was omitted from the accounts, the buyer may examine whether this constitutes a breach.

However, the financial statement date, accounting standards and qualifications within the contractual provision should all be reviewed.

No Undisclosed Liabilities Warranty

This can be one of the most important protections.

A provision may state that the target company has no liabilities other than those appearing in specified financial statements or properly disclosed to the buyer.

If a historical debt subsequently emerges, the buyer can compare that liability directly against the contractual warranty.

Tax Warranties

Tax warranties can cover matters such as filing returns, paying taxes, maintaining records and disclosing tax investigations.

However, tax warranties alone may not always provide sufficient protection.

This is why substantial acquisitions often require a separate tax indemnity or tax covenant.

What Is a Tax Indemnity?

A tax indemnity can allocate responsibility for tax liabilities relating to periods before closing.

For example, the seller may agree to compensate the buyer for specified tax liabilities arising from transactions occurring before completion.

The exact drafting is critical.

Definitions of “Tax,” “Liability,” “Loss” and “Pre-Closing Period” can materially affect the claim.

Specific Indemnities

Sometimes due diligence identifies a known problem but its final cost cannot yet be determined.

Suppose the target company is already undergoing a customs audit.

Rather than abandoning the acquisition, the buyer may require the seller to indemnify losses resulting from that particular investigation.

This is a specific indemnity.

It isolates a known risk.

What If There Is No Specific Indemnity?

A claim may still potentially exist.

The buyer should examine general warranties, disclosure obligations and other contractual provisions.

Depending on the facts, general principles of contractual liability and other available legal grounds may also require consideration.

The absence of a specific indemnity does not automatically mean that the seller can never be pursued.

What If the Seller Deliberately Hid the Debt?

Intentional concealment creates a substantially different situation from an innocent accounting error.

The buyer should preserve evidence showing what the seller knew and when.

Emails, management reports, correspondence with authorities, bank communications and internal accounting records may demonstrate that the seller was aware of the liability before signing or closing.

Seller Knowledge

Some warranties may be qualified by the seller’s knowledge.

For example, a warranty might effectively state that, so far as the seller is aware, there are no threatened proceedings against the company.

The definition of seller knowledge then becomes extremely important.

Does it mean actual knowledge?

Does it include information that particular directors should reasonably have known?

Does the agreement identify specific persons whose knowledge counts?

The wording should be analyzed carefully.

Disclosure Letter

The disclosure letter can completely change the buyer’s position.

A seller may provide warranties in the share purchase agreement but disclose exceptions separately.

For example, the agreement may warrant that no litigation exists.

The disclosure letter may then identify three pending lawsuits.

Those disclosed matters ordinarily need to be treated differently from genuinely hidden liabilities.

What Counts as Proper Disclosure?

This can become a major dispute.

The seller may argue that the information existed somewhere in a virtual data room containing thousands of documents.

The buyer may argue that the liability was never fairly or specifically disclosed.

The answer depends heavily on the contractual disclosure standard.

Foreign investors should therefore avoid agreements that treat every document uploaded into a massive data room as automatically and fully disclosed without careful qualification.

Due Diligence Does Not Automatically Protect the Seller

A seller may argue:

“The buyer had lawyers and accountants. They should have discovered the debt.”

That argument does not necessarily resolve the dispute.

The effect of due diligence depends on the agreement, the information actually made available, the nature of the liability and whether the seller made inaccurate contractual statements.

Due diligence and warranties perform different functions.

What If the Buyer Could Have Discovered the Debt?

This is fact-sensitive.

The seller may rely on buyer knowledge provisions or disclosure clauses.

The buyer may respond that essential documents were withheld, misleading information was provided or the relevant liability could not reasonably have been identified from the disclosed material.

The acquisition documents should be reviewed before conclusions are drawn.

Can the Buyer Claim the Entire Debt as Compensation?

Not necessarily.

The calculation of loss can become complex.

Suppose an undisclosed EUR 1 million liability emerges.

The buyer may argue that the company is worth EUR 1 million less.

But contractual definitions, tax effects, insurance recoveries and other financial consequences can influence the recoverable amount.

Compensation should therefore be calculated rather than assumed.

Buyer Loss Versus Company Loss

This distinction is important.

The liability may technically be payable by the acquired company.

The buyer, however, purchased shares whose value has been reduced because the company now carries that liability.

The contractual structure should determine who can make the warranty or indemnity claim and how the resulting loss is calculated.

Purchase Price Overpayment

One potential economic theory is that the buyer paid more for the shares than they were actually worth because the company’s true liabilities were concealed.

For example, the buyer paid EUR 10 million based on an agreed financial position.

A hidden EUR 3 million liability subsequently emerges.

The buyer may argue that the true value of the acquired shares was materially lower.

The legal viability and calculation of such a claim depend on the contractual and factual circumstances.

Debt-Free/Cash-Free Transactions

Many acquisitions price companies using a debt-free/cash-free mechanism.

Hidden financial debt can therefore directly distort the purchase-price calculation.

The buyer should review whether the undisclosed item falls within the contractual definition of “Debt,” “Indebtedness” or a similar concept.

Definitions are frequently broader than conventional bank borrowing.

Completion Accounts

Where the transaction uses completion accounts, liabilities existing at closing may affect the final purchase-price adjustment.

The buyer should check whether the disputed debt should have been included in the closing balance sheet.

Deadlines for challenging completion accounts can be short.

Immediate review is important.

Locked-Box Transactions

In a locked-box structure, the buyer may rely on financial information fixed at an earlier date.

The agreement may prohibit value from leaving the target company between the locked-box date and closing except for specifically permitted payments.

If the seller extracts value or causes the company to assume liabilities during that period, leakage provisions may become relevant.

Hidden Bank Loans

Undisclosed bank borrowing should be investigated immediately.

Obtain the loan agreement and determine when the debt arose.

Check whether security was granted over company assets.

Then compare the loan against the seller’s representations and the purchase-price calculation.

Hidden Mortgages and Security Interests

A company may own valuable machinery or other assets while those assets secure undisclosed obligations.

Turkey’s commercial movable-pledge framework permits numerous business assets and rights to be pledged, including machinery, equipment, inventory, receivables, intellectual property and certain commercial rights. The Ministry of Trade also states that TARES pledge-registry searches can be conducted without membership. (Ticaret Bakanlığı)

This illustrates why asset ownership alone is not sufficient during acquisition due diligence.

Undisclosed Related-Party Debts

Foreign investors should investigate debts involving the seller and affiliated companies carefully.

A seller may claim that a substantial balance is merely an internal group account.

After closing, an affiliate may demand repayment.

The share purchase agreement should clearly address related-party balances at completion.

Unrecorded Contracts

A company can become liable under an agreement that was never properly reflected in the financial statements.

Review emails, payment history and supplier relationships where suspicious transactions emerge.

An undocumented obligation may still require legal analysis.

Customs Liabilities

Foreign investors acquiring importing companies should pay particular attention to historical customs transactions.

Additional duties or penalties may arise from valuation, tariff classification, origin documentation or other historical declarations.

If the underlying imports occurred before closing, the buyer should examine whether the seller gave customs-compliance warranties or specific indemnities.

Social Security Liabilities

Historical employment practices can create public liabilities after an acquisition.

Review payroll, employment records and social security documentation.

For limited companies, public-debt rules require particular attention because the Ministry of Trade’s 2026 foreign-investor guide expressly notes shareholder responsibility for uncollectible public debts in proportion to capital shares. (Ticaret Bakanlığı)

Environmental Liabilities

Environmental problems can be particularly difficult because remediation costs may arise years after the conduct occurred.

Industrial acquisitions should investigate permits, contamination, waste practices and previous regulatory correspondence.

A clean financial balance sheet does not prove that an industrial site has no environmental exposure.

Regulatory Fines

Sector-specific investigations should also be reviewed.

Energy, financial services, competition, customs and other regulated industries can create substantial administrative exposure.

Ask whether any authority has requested information or commenced an inspection even if no formal fine has yet been imposed.

What If the Company Is Actually Insolvent?

The consequences become significantly more serious.

The Ministry of Trade’s corporate guidance confirms that Turkish corporate law contains specific rules concerning capital loss and companies whose liabilities exceed their assets. (Ticaret Bakanlığı)

If hidden debts reveal that the acquired company is financially distressed or potentially over-indebted, management should assess corporate-law obligations immediately rather than treating the problem solely as a dispute with the seller.

Can the Buyer Cancel the Acquisition?

Potentially, but this is highly fact-dependent.

Not every undisclosed liability justifies unwinding an entire completed acquisition.

The buyer should examine the severity of the breach, contractual remedies, applicable legal rules and whether rescission or another form of termination is legally available.

In many cases, monetary compensation may be commercially more practical.

Compensation Versus Rescission

These remedies should not be confused.

Compensation seeks financial recovery.

Rescission or similar relief seeks to unwind or terminate the transaction.

The appropriate remedy depends on the agreement and legal grounds.

A buyer should not send a termination notice before understanding the legal consequences.

Warranty Claim Notice

Share purchase agreements frequently require the buyer to notify the seller of claims.

The notice clause may specify:

the deadline,

the required information,

the recipient,

the method of delivery,

and the level of detail required.

Failure to comply can create serious problems.

Do Not Wait Until the Debt Is Finally Paid

This can be a major mistake.

A buyer may receive a tax assessment or creditor claim and wait years until litigation finishes before notifying the seller.

By then, the contractual warranty claim period may have expired.

The SPA should be reviewed immediately when the liability first becomes known.

Limitation Periods and Contractual Claim Periods

Do not assume that ordinary statutory limitation rules are the only deadlines.

The share purchase agreement may contain shorter contractual periods for notifying warranty claims.

Tax warranties may have different periods from general warranties.

Fundamental warranties may have another period.

Specific indemnities may operate differently again.

Every deadline should be mapped immediately.

Liability Caps

The seller’s liability may be contractually capped.

For example, the agreement might limit general warranty liability to a percentage of the purchase price.

Tax or title warranties may have separate caps.

The buyer should calculate the maximum contractual recovery before determining litigation strategy.

De Minimis Thresholds

Some agreements exclude very small claims.

A single EUR 2,000 liability may not qualify.

The contract may contain a minimum individual claim threshold.

Basket Thresholds

The agreement may also require multiple qualifying claims to exceed an aggregate threshold before the seller becomes liable.

For example, several undisclosed liabilities may need to exceed EUR 100,000 collectively.

Each discovered liability should therefore be recorded even when individually small.

Fraud and Contractual Limitations

Where deliberate concealment or fraudulent conduct is suspected, the effect of contractual limitations requires separate legal analysis.

The buyer should preserve evidence concerning seller knowledge and intent rather than assuming ordinary warranty limitations necessarily resolve every issue.

Evidence the Buyer Should Preserve

Immediately preserve the share purchase agreement, disclosure letter, due diligence reports, data-room contents, financial statements, seller presentations, management correspondence, bank documents and communications concerning the disputed liability.

Do not rely solely on the final signed agreement.

Pre-contract communications may become important to understanding what was represented and disclosed.

Preserve the Data Room

This is especially important.

After closing, virtual data-room access may expire.

Download and securely preserve the version available during due diligence.

The seller may later argue that a particular document was disclosed.

The buyer needs evidence showing exactly what information was actually available before completion.

Compare the Debt Against the Disclosure Letter

For each hidden liability, ask four questions:

Did the liability exist before closing?

Was it disclosed?

Which warranty or indemnity covers it?

What financial loss resulted?

This framework can rapidly identify the strongest claims.

Create a Claims Matrix

A post-acquisition claims matrix can contain:

Liability – Amount – Origin Date – Discovery Date – Relevant Warranty – Disclosure – Notice Deadline – Seller Defense – Estimated Loss – Evidence.

For acquisitions involving multiple hidden liabilities, this becomes extremely valuable.

Notify Insurers Where Relevant

The target company may have insurance potentially covering part of the underlying liability.

The buyer should review applicable policies and notification deadlines.

Failure to notify an insurer can unnecessarily increase the eventual loss.

Do Not Automatically Pay the Debt

Some claims may be disputed.

Before paying a substantial historical liability, determine whether the target company has valid defenses.

The buyer’s obligation to mitigate losses under the transaction agreement may also require consideration.

Do Not Settle Without Reviewing the SPA

The share purchase agreement may restrict settlement of third-party claims without involving the seller.

For example, the seller may have rights to participate in defending a tax or litigation claim.

Settling without following the contractual procedure can potentially affect recovery rights.

Third-Party Claims Procedure

Well-drafted acquisition agreements frequently regulate how third-party claims are handled.

The buyer may be required to notify the seller, provide information and allow participation in the defense.

The seller may argue that it should not pay a liability that the buyer voluntarily settled without consultation.

Follow the contractual procedure carefully.

What If the Seller Refuses to Pay?

The next step depends on the dispute-resolution clause.

The agreement may provide for Turkish courts or arbitration.

International acquisitions frequently contain arbitration provisions.

Before commencing proceedings, check whether negotiation, notice or mediation steps are contractually required.

Arbitration for M&A Disputes

Arbitration can be particularly relevant where the buyer and seller are from different jurisdictions.

The arbitration clause should be reviewed for seat, institution, language, governing law and tribunal structure.

The underlying target company being Turkish does not necessarily mean every shareholder acquisition dispute must be resolved exclusively before Turkish courts.

Can Interim Protection Be Requested?

Potentially, where the relevant legal requirements are satisfied.

This may become important where the seller is disposing of assets while a substantial compensation claim is developing.

The availability of protective measures depends on the forum, claim and evidence.

What If the Seller Has Left Turkey?

A compensation claim does not necessarily disappear.

However, cross-border service and enforcement may become necessary.

The buyer should identify the seller’s assets and residence before beginning proceedings.

Foreign Seller Versus Turkish Seller

The seller’s nationality is less important than the contractual structure, governing law, dispute-resolution mechanism and location of recoverable assets.

A successful judgment or arbitral award has limited commercial value if enforcement has not been considered.

What Should the Buyer Do in the First 24 Hours?

Preserve the SPA, disclosure letter, due diligence report and complete data-room contents. Obtain the documentation establishing the newly discovered liability. Identify the contractual warranty or indemnity that may apply.

Immediately calculate every relevant claim-notification deadline.

Do not contact the seller informally before understanding the contractual notice requirements.

What Should Be Done During the First Week?

Prepare a detailed claims matrix.

Determine when each liability arose.

Identify whether it was disclosed.

Calculate the potential financial loss.

Review warranties, indemnities, caps, thresholds and limitation provisions.

Determine whether the underlying debt itself can be challenged.

Then prepare the appropriate contractual notice while preserving all rights.

How Buyers Can Protect Themselves Before Closing

The best undisclosed-debt claim is the one that never becomes necessary.

Foreign investors should conduct legal, tax and financial due diligence and negotiate protections specifically addressing historical liabilities.

General statements such as “the company has no debt” should be converted into precise contractual warranties.

Known risks should receive specific indemnities.

Material uncertainty may justify escrow, holdback or purchase-price adjustments.

Use Escrow for High-Risk Transactions

Suppose a EUR 20 million acquisition involves unresolved tax exposure estimated at EUR 2 million.

Rather than paying the entire purchase price immediately, the parties may agree on an appropriate security structure.

This can materially improve the buyer’s practical recovery position if the liability later crystallizes.

2026 Perspective for Foreign Investors

Turkey’s 2026 corporate framework continues to recognize joint-stock and limited companies as separate capital companies, with company-level responsibility for corporate debts subject to the specific rules applicable to each structure. (Ticaret Bakanlığı)

The Ministry of Trade’s current legislation list also confirms that both the Turkish Commercial Code No. 6102 and Turkish Code of Obligations No. 6098 remain central parts of the applicable commercial legal framework. (Ticaret Bakanlığı)

For foreign investors acquiring existing companies, the practical lesson is clear: discovering an undisclosed debt does not automatically transfer that economic loss back to the seller. The buyer must identify a legal and contractual basis for recovery and comply with the claim procedure and deadlines applicable to the acquisition.

Frequently Asked Questions

1. Can I claim compensation if I buy a Turkish company and later discover hidden debts?

Potentially. Recovery depends on the share purchase agreement, warranties, indemnities, disclosure, nature of the debt, seller conduct and applicable legal rules.

2. Does changing the shareholder eliminate old company debts?

Generally, a share transfer does not itself erase liabilities already belonging to the company. The corporate entity continues despite the ownership change.

3. Can I claim against the seller for an undisclosed tax debt?

Potentially, particularly where tax warranties or a pre-closing tax indemnity covers the liability. The exact contractual language must be reviewed.

4. What if the seller deliberately concealed the debt?

Intentional concealment can materially affect the legal analysis. Evidence showing what the seller knew before signing and closing should be preserved immediately.

5. Can the seller argue that I should have discovered the debt during due diligence?

The seller may raise that argument, but its effect depends on the SPA, disclosure standard, buyer-knowledge provisions and information actually provided.

6. Can I recover an undisclosed bank loan or corporate guarantee?

Potentially. Review debt warranties, financial statements, purchase-price provisions and specific contractual protections.

7. Can I cancel the entire company purchase?

Potentially in sufficiently serious circumstances and where the applicable legal requirements are satisfied, but cancellation is not an automatic consequence of every undisclosed liability.

8. How quickly should I notify the seller?

Immediately review the SPA. Contractual claim-notification periods may be considerably more important than the buyer initially realizes.

9. Should I pay the hidden debt before claiming against the seller?

Not automatically. Determine whether the underlying liability can be challenged and whether the SPA contains procedures governing third-party claims and settlements.

10. What documents are most important?

The SPA, disclosure letter, data-room contents, due diligence reports, financial statements, correspondence and documentation establishing the hidden liability should be preserved immediately.

Legal Assistance for Foreign Buyers Discovering Undisclosed Company Debts in Turkey

Discovering undisclosed debts after buying a company in Turkey requires two investigations at the same time.

The first concerns the debt itself: Is it legally valid, when did it arise, can it be challenged and how much exposure does it actually create?

The second concerns the seller: Was the liability disclosed, which representation or warranty was breached, does an indemnity apply, what notice deadline exists and what compensation can the buyer claim?

The transaction documents should therefore be reviewed immediately after the liability becomes known. Waiting for a tax case, creditor lawsuit or regulatory proceeding to finish before examining the SPA can cause the buyer to miss contractual claim deadlines.

Fırat Fesih Kaya Law Office provides legal assistance to foreign investors, international companies and foreign buyers concerning Turkish company acquisitions, undisclosed company debts, breach of warranty claims, seller liability, tax indemnities, hidden liabilities, post-acquisition disputes, share purchase agreements, M&A litigation and compensation claims in Turkey.

Legal assistance may include reviewing the share purchase agreement and disclosure letter, analyzing warranties and indemnities, determining whether liabilities were properly disclosed, preparing contractual claim notices, calculating recoverable losses, defending the underlying liability and representing foreign investors in negotiations, litigation or arbitration.

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

When an undisclosed liability is discovered, the buyer should not wait for the debt to become final before reviewing its contractual rights against the seller. Early analysis of warranties, indemnities, disclosure and claim deadlines can determine whether a potentially substantial compensation claim is preserved or lost.