Despite the judicial recess in August, concordats did not slow down. Last month, another 194 companies were granted a temporary stay of execution for concordat. Thus, the number of companies that received concordat in 8 months of the year rose to 982. Istanbul Chamber of Industry (ISO) President Erdal Bahçıvan warned once again: If some of the concordats turn into bankruptcies in the coming months and spread to the economy in general with chain effects, it may result in heavy costs…
According to the data compiled by the website konkordatotakip.com for EKONOMİ newspaper from the Press Advertisement Agency, while the courts granted temporary respite for 194 files in August, this number increased to 982 in 8 months of the year. Considering that 1384 and 1387 concordat decisions were taken in 2018 and 2019, respectively, when concordats were paved the way and almost boomed, an ‘unwanted record’ may be set by the end of 2024.
On the other hand, reaching the highest monthly concordat data of recent years in August, when the judicial holiday was in effect, raises concerns about the last 4 months of the year. Based on the data, in the January-August period, the number of files for which Concordat was granted a final deadline was 361, while the decision to reject Concordat was made for 358 files; the number of bankruptcies increased to 58 in 8 months.
Vulnerability of sectors increases
In the eight months of the year, the construction sector had the highest number of concordat temporary deadline decisions, with 64, followed by textiles with 58 files.
Furniture and medical equipment and medical products sectors are also among the sectors with increased risk with 25 temporary suspension decisions each. On the other hand, the metal product manufacturing sector, including companies operating in the automotive supply industry, is also increasing in number. After the concordat of ROBO, which installed the robotic systems of TOGG’s body production line in May, last month, a concordat temporary respite decision was issued for Arte Elektronik, which provides electronic card support to TOGG. The applications of Alkan Elektronik, Gökyol İnşaat and Mega Polietilen, which is traded on the stock exchange, are among the concordats that attracted attention in the summer period.
The allegations are grave
In the last quarter of 2021, the problems of access to financing and the gradual erosion of working capital damaged the sustainability of companies that were in the habit of turning their businesses with bank loans and checks, and the falling demand both at home and abroad dealt a significant blow to these struggling companies. For this reason, the recent concordat storm is no surprise… However, it is also heard that the abuses of some companies through concordat have increased.
So much so that the alarm level has been raised in the chambers of commerce and industry affiliated to Union of Chambers and Commodity Exchanges (TOBB). According to the allegations, some companies are taking advantage of the situation and applying for concordat to protect themselves against their debts. In fact, some companies that cannot get concordat in the province where their workplace is located move their workplace address and get concordat from different provinces. The gravest claim is that some courts take these decisions very easily. In addition, it is among the information that some law offices reach out to important representatives of risky sectors and offer them a commission if they convince the companies in trouble to concordat and direct them to their offices.
Concordat applications were one of the agenda items at the ISO August Assembly meeting.
ISO President Erdal Bahçıvan said they have been following with concern the increasing number of concordat applications in recent days due to the slowdown in the economy and trade, and added: “No day passes without news of new concordats from different sectors. As the cash shortages in the market continue to increase, the transformation of some of the concordats into bankruptcies in the coming months and the spread of the economy in general with chain effects may result in heavy costs. This is what we have been saying since the first days when we started to receive danger signals on this issue: We strongly suggest that the concordat should only apply to financial and public institutions but that commercial receivables should be excluded from the scope of the concordat. Otherwise, we will leave hundreds of interconnected commercial creditors of the company that we have given the concordat opportunity to survive in a very difficult situation. Because while trying to save a company, we may face the reality of dozens of companies that will become even more desperate. For this reason, we expect the legal regulation to be made as soon as possible and that there will definitely be a return from this unpleasant practice.”
15,000 companies shut down in 7 months
Like the number of concordats, the picture in the number of closed companies is not encouraging. According to the Established and Closing Company Statistics announced by TOBB, the number of companies closed in 7 months of the year increased by 28.3 percent and reached 14,828. The number of companies opened in the January-July period decreased by 14.5 percent. In the said period, 1 company closed down for every 4 companies opened. In 7 months of the year, the number of companies that decided to liquidate increased by 3.8 percent compared to the same month of the previous year and reached 15,077.
Bounced checks up by 247 percent
The increasing fragility in the market’s payment chain was also reflected in the bounced check data. According to the TBB Risk Center data, in the January-July period, the amount of checks presented to banks increased by 82 percent to TRY 4,2 trillion, while the amount of checks presented to banks increased by 2 percent. The amount of bounced checks increased by 247 percent in this period and reached TRY 90 billion. The number of ‘endorsed checks’ increased by 80 percent in the related period.
