Turkish firms face peak bankruptcy risk in 2024—top companies seeking concordatum revealed

Some 1,723 Turkish companies, including prominent ones, requested bankruptcy protection as a result of outstanding debt stocks, surpassing the previous highest level recorded in 2019.

Amid ongoing challenges such as tight monetary policies within the disinflation program, rising labor costs, and fluctuations in exchange rates, Turkish companies grappled with declining profits and unsustainable debt levels.

In response, many sought bankruptcy protection (concordatum) as a legal measure to restructure their financial bottlenecks and sustain operations under the provisions of the Turkish Execution and Bankruptcy Law.

According to konkordatotakip.com, a Turkish website tracking bankruptcy protection (concordatum) filings and related legal proceedings, a total of 1,723 bankruptcy protection requests were filed in 2024, surpassing the 1,387 filings in 2019.

In December alone, 219 provisional decisions were granted, marking the highest number recorded monthly.

File photo shows high-rise office buildings in Maslak, Istanbul, and Türkiye. (AA Photo)

Construction sector takes the hardest hit

Construction companies, already grappling with credit difficulties and price instability, led the filings at the end of December, followed by the textile and food sectors. Since 2018, the most vulnerable industries have consistently included construction, textiles, and food, while Istanbul, Ankara, and Kocaeli emerged as the most affected regions.

The average duration for a provisional decision to evolve into a bankruptcy ruling is 423 days, while rejection decisions take an average of 473 days and confirmation rulings stretch to around 700 days. According to konkordatotakip.com data:

• 144 cases received definitive approval.
• 89 applications were rejected.
• 24 firms declared bankruptcy.
• Over the year, 827 cases were definitively approved, 701 were rejected, and 132 companies went bankrupt.

"Bankruptcy Protection Developments at a Glance" report published by the Central Bank of the Republic of Türkiye (CBRT) in September 2024 highlighted that many recent bankruptcy protection filings stem from firms already categorized as high-risk before monetary tightening.

These firms exhibited higher debt levels and significantly lower liquidity compared to their counterparts, the report examined.

CBRT's report also highlighted the ratio of commercial debt to total assets for these companies stood at 36%, in contrast to the 11% observed in other firms, which was deemed as another important indicator.

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High-profile cases for bankruptcy protections

According to business-focused dunya.com, several prominent companies entered the bankruptcy protection process in 2024 as follows:

• Arven Pharmaceuticals, the first Turkish company to develop biosimilars for global markets, is part of Sanovel Pharmaceuticals.

The facility of Arven Pharmaceuticals, the first Turkish company developing biosimilars for global markets, including the US and EU, in Kirklareli, Türkiye. (Photo via wikipedia.org)

• Gursut, a cheese producer listed for adulteration concerns.
• Hitit Ceramic was once a top taxpayer.
• Granz Fashion is a leading textile brand in Istanbul.
• Yeniyurt Petroleum, facing over ?1 billion ($28.26 million) in debt and allegations of asset misappropriation.
• Alsemo is a renowned furniture manufacturer.
• Darkale Yapi, operating in Türkiye for 20 years.
• Tirebolu 42, a 120-year-old tea producer.
• Aroma is a 57-year-old major beverage company.

Aerial view of the headquarters of Aroma, a 57-year-old Turkish beverage company in Bursa, Türkiye. (Photo via Aroma's promotional video)

• Karaca Textile is a top 100 exporter.
• 07 Ugur Profil is a leader in automotive parts.
• KEM-P, a major engine manufacturer.
• GKN Kargo is a logistics firm and sports sponsor.

Galatasaray Vice President Erden Timur (right) and GKN Kargo Chairman Gokhan Akyurek (left) hold up a Galatasaray jersey during a sponsorship signing ceremony at RAMS Park in Istanbul, Türkiye, on Jul. 27, 2023. (AA Photo)

• Emek Fabric is a textile supplier to global brands, such as Zara and H&M.
• Armes Home, exporting to 34 countries.
• Bad Bear, a Turkish clothing brand, granted an extension.

January 04, 2025 11:10 AM GMT+03:00