TMA EUROPE CONFERENCE Update On Restructuring Regime in Turkey AS / NEXIA TURKEY 11 June 2010.

Slides:



Advertisements
Similar presentations
Accounting for Legal Reorganizations and Liquidations
Advertisements

Banking in Todays Environment. Dave Orr Banking Professional for 22 years Expertise in Commercial Lending Employed at West Suburban Bank.
Insolvency Law and Practices in Korea Business Law Asia & In-House Summit June 2009 Sang-goo Han.
Copyright © 2004 by Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany BUSINESS LAW E-Commerce and Digital Law International Law and Ethics.
1 CHAPTER 25 Bankruptcy, Reorganization, and Liquidation.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Chapter 20 Corporations in Financial Difficulty.
Chapter Thirteen Accounting for Legal Reorganizations and Liquidations
17 Chapter Ending the Venture McGraw-Hill/Irwin Entrepreneurship, 7/e
Bankruptcy & Reorganization Business Finance 335 Supplemental Material.
The effect of gearing Week 11.
Lecture 6: Debt Policy Changing a firm’s capital structure should not affect its value to shareholders. This chapter analyzes several possible financing.
Transparency around exit costs across Europe Karin S. Thorburn Dartmouth College.
Financial Distress. What is Financial Distress? A situation where a firm’s operating cash flows are not sufficient to satisfy current obligations and.
© The McGraw-Hill Companies, Inc., 2004 Slide 13-1 McGraw-Hill/Irwin Chapter Thirteen Accounting for Legal Reorganizations and Liquidations.
1 Chapter 15 FINANCIAL DISTRESS: TURNAROUND OPPORTUNITY OR LIQUIDATION ENTREPRENEURIAL FINANCE.
Secondary Mortgage Market 16 March 2005 Pamela M. Hedstrom, CFA.
Bootstrapping and Financing the closely held company
Chapter 15 Succession Planning and Strategies for Harvesting and Ending the Venture McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc.
Chapter 17 Restructuring a company
Commercial Law (Mgmt 348) Professor Charles H. Smith Creditors’ Rights and Remedies (Chapter 28) Spring 2009 Professor Charles H. Smith Creditors’ Rights.
Dilemmas of a Financially Distressed Entity [ Opportunities for Accountancy Professionals ]
Bankruptcy, Reorganization, and Liquidation
CHAPTER FIFTEEN Lending Policies And Procedures The purpose of this chapter is to learn why sound lending policies are important to banks and other lenders.
1 Chapter 19 Business failure Copyright © Nelson Australia Pty Ltd 2003.
Managing Turnaround of the Slovenian Economy: Restructuring of Banking, Corporate and State Sectors Prague, November 2013 prof. Marko Simoneti
© 2011 Cengage Learning created by Dr. Richard S. Savich. California Real Estate Finance Bond, McKenzie, Fesler & Boone Ninth Edition Chapter 1 Introduction.
Finance THE BANKING SYSTEM. Finance Lecture outline  The types and functions of banking  Central banking  Commercial and investment.
THE NEED FOR CAPITAL * START-UP OR VENTURE CAPITAL * WORKING CAPITAL * INVESTMENT CAPITAL.
U PDATE ON R ESTRUCTURING R EGIMES IN E ASTERN E UROPEAN E CONOMIES J UNE 11, 2010 Gordon Johnson EM Advisors LLC, USA Valeriu Nistor SOAR, Romania Alexander.
Introduction to Business Chapter 6: Sources of Finances.
P A R T P A R T Credit Introduction to Credit and Secured Transactions Security Interests in Personal Property Bankruptcy 6 McGraw-Hill/Irwin Business.
Ending the Venture Chapter 17.
Planning/Ending the Venture
©2003 Prentice Hall Business Publishing, Advanced Accounting 8/e, Beams/Anthony/Clement/Lowensohn Corporate Liquidations and Reorganizations Chapter.
Chapter 20 – Corporate Debt II BA 543 Financial Markets and Institutions.
7 - 1 Lecture Nine Raising Capital: Sources of Long Term Financing Internal Sources: Retained Earnings Depreciation External Sources: Borrowing: Bonds.
© 2010 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible Web site, in whole or in part.
5 THINGS EVERY LAWYER SHOULD KNOW ABOUT BANKRUPTCY Laura A. Deeter, Esq.
Chapter 15 Succession Planning and Strategies for Harvesting and Ending the Venture McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc.
Business Law and the Regulation of Business Chapter 39: Bankruptcy By Richard A. Mann & Barry S. Roberts.
BBL sponsored by the Municipal Finance Thematic Group Municipal Insolvency Principles and Practice -- Comparing the Cases of Hungary and South Africa Wednesday,
McGraw-Hill/Irwin Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 20 Creditors’ Rights and Bankruptcy.
ACCOUNTING & FINANCE Balance Sheet. Introduction and Key Definitions It shows the financial position of a firm at a particular moment in time. what “
ACCOUNTING & FINANCE Balance Sheet IGCSE Business Studies.
1 - 0 Copyright © 2002 South-Western The basic goal: to create stock- holder value Agency relationships: 1.Stockholders versus managers 2.Stockholders.
California Real Estate Finance Fesler & Brady 10th Edition
© 2004 IRCJ . All rights Reserved IRCJ Industrial Revitalization Corporation of Japan Professor Dr. Shinjiro Takagi Chairman Industrial Revitalization.
Monitoring the Business + - x ÷ ÷ x x ÷ : : : : Ratio Analysis C. O' Brien Chanel College.
SME’s Accessing Finance & Support Presented by: Mandy Murphy Regional Business Banking Manager AIB North East Patricia O’Farrell Branch Manager AIB Kells.
Business Finance FINANCING A BUSINESS. Financial Needs … Start up Capital (set up costs for a new business) Working Capital (day to day running costs)
Small businesses that are in financial distress have three potential bankruptcy options. These are Chapter 7, Chapter 11, and Chapter 13.  Individuals.
Purposes Evaluation of loan applicant “Big” picture view Variety of information and sources to help in evaluation of applicant.
Debts Recovery in Romania. INTRODUCTION Recovering a debt can be a complex process everywhere, for every business, regardless of the industry. The Romanian.
Xu Che.  Bankruptcy is a legal status of a person or organization that cannot repay the debts it owes to creditors.  Liabilities exceed Assets  Negative.
Chapter 21 Creditors’ Rights and Bankruptcy Copyright © 2015 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior.
5th IADI EARC Online Training and Seminar «Role of the SDIF in Bank Liquidation -TURKEY Case» Savings Deposit Insurance Fund (SDIF) – TURKEY Hanifi DARICI.
How to develop and assess a good business plan
FINANCIAL DISTRESSS; TURNAROUND OPPORTUNITY OR LIQUIDATION
Nordic-Baltic Insolvency Network
Sources of Finance GCSE Business Studies tutor2u™
Long term Finance Shares Debentures Term loans leasing
Impact of the Code on banks and financial institutions
Ben Court Bankruptcy and Creditor’s Rights Stinson Leonard Street LLP
© 2005 The McGraw-Hill Companies, Inc. All rights reserved.
EPISODE 4 – VALUATION IN THE CONTEXT OF BANKRUPTCY
Chapter 16 Learning Objectives
Chapter 15 Succession Planning and Strategies for Harvesting and Ending the Venture McGraw-Hill/Irwin Copyright © 2010 by The McGraw-Hill Companies, Inc.
Corporate Finance reorganization.
The Role of the Court Officer in Insolvency Proceedings
Presentation transcript:

TMA EUROPE CONFERENCE Update On Restructuring Regime in Turkey AS / NEXIA TURKEY 11 June 2010

CONTENTS  Introduction: Turnaround Management in Turkey  Features of Debtors & Creditors  Corporate Debt-Restructuring Methods  Out-of-Court Restructuring  Court Restructuring – Postponement of the Bankruptcy  Postponement of Bankrutpcy – Practices  Positive Results of the Postponement of Banktrupcy  Evaluation of the PoB Process  Other Features of the Turkish Restructuring Regime 2

TURNAROUND MANAGEMENT IN TURKEY  In essence, corporate debt restructuring is the main service provided by turnaround professionals.  Corporate restructuring (business reviews, SWOT analysis, etc.)  Restructuring of financial and trade debt of companies (negotiations with creditors, projecting cash flows, etc.)  Lender advisory 3

FEATURES OF DEBTORS & CREDITORS  Major features of the Turkish debtors and creditors  SME-MME business segment companies are major targets for turnaround management:  Industrial sectors: Textile, Iron&Steel, Construction Materials,etc.  Family owned – narrow shareholder base  High financial debt relative to equity & too many creditors  Reasons of distress:  Wrong investment decisions, lack of feasibility analyses and low equity  Problems of liquidity and working capital management rather than solvency issues  Vulnerability to domestic and external demand shocks  Low penetration of external advisory services regarding turnaround management  Creditors, especially financial institutions have in-house remedial management teams for NPLs or exit accounts. 4

CORPORATE DEBT RESTRUCTURING-METHODS  Out-of-court restructuring  Turnaround under the provisions of Execution and Bankruptcy Law (EBL): After the Turkish financial crisis in 2001, EBL has changed in order to permit rehabilitation of the companies without engendering terminal insolvency.  Postponement of bankruptcy (PoB) (aka Turkish Chapter 11)  Reorganization by way of the abandonment of the debtor’s assets 5

OUT-OF-COURT RESTRUCTURING  In Turkey, both creditors and debtors prefer out-of-court restructuring against court restructuring, since  Less legal interference  More customized restructuring plans  Turnaround professionals may have greater involvement in the out-of-court restructuring process.  Successful out-of court restructuring involves:  Creditors receive additional security (e.g. lien against guarantor’s real estate, receivables, etc.) or shareholders are induced to sell personal valuable assets in order to raise equity  Revolving and overdraft lines are converted into middle-long term loans in order to oversee the debtors’ cash flow  Revolving lines are rolled over after the interest is paid, in order to provide a grace period  Interest rates on loans are revised downwards 6

COURT RESTRUCTURING – POSTPONEMENT OF BANKRUPTCY  Most frequent way of debt restructuring. Approval conditions:  Major goal is to preserve company assets and to gradually diminish company debt with a viable development plan in order to prevent terminal insolvency.  Major requirements: Liabilities excess company assets and company must present a viable development plan for the future. However, the plan need not be submitted to creditors’ approval or without the opinion of any third party turnaround management company.  Automatic stay is granted after the court has examined the company’s compliance to the requirements stated above and trustee is appointed immediately.  Duration: 1+4 years, subject to trustee recommendation and court approval. 7

POSTPONEMENT OF BANKRUPTCY-PRACTICES  Company and its guarantors pool their tangible assets (including individual if necessary) as collateral for all the financial creditors.  Temporary suspension of litigations.  All financial debt are pooled and restructured as a single amortizing loan and paid periodically (quarterly or semi-annual) pro-rata.  Cash flow projections and debt repayment capacity are analyzed by the leader creditor or an external advisor.  Role of the trustee: Trustee had to approve the whole process. 8

EVALUATION OF THE PoB PROCESS  Problems in the “institution of trusteeship”:  Trustees are not turnaround professionals and do not have the necessary skills and experience to manage the troubled company.  They are not able to yield the neccessary power to manage the company. Most of the time, the same management which has brought the company to the brink of bankruptcy continues to manage the company. Trustees only signs off the management’s decisions.  Courts grant PoBs and automatic stays rather hastily and without consulting neither to the company’s creditors nor to the third party turnaround proffesionals.  Courts are not specialized in assesing the bankruptcy process.  When company files for the PoB, it is not announced to creditors, hence creditors’ views are not sought regarding the proposed development plan.  Distressed companies exploit the automatic stay provisions in order to protect shareholder assets from the creditors. 9

OTHER FEATURES OF THE TURKISH REGIME  Lack of distressed lending: Banks and other non-bank financial institutions are hesitant in lending to companies under distress or under the PoB protection.  Immature secondary market for NPLs: Lack of dedicated, expert investment banking companies eager to buy NPLs.  The legal framework is lenient on debtors.  Low recovery rates  High costs regarding restructuring, including taxes and administrative fees 10

THANK YOU… Candas Gulez–