Lien Conditions and Status of Borrowers and Guarantors

March 17, 2021

1. What is a provisional attachment order?

The borrower who owes money incase to the possibility of missing goods, it is a measure applied by court decision on the movables and immovables owned by the debtor. As a result of the execution of the court decision, the creditor guarantees the money by precautionary lien.

2. The conditions required for the decision of precautionary attachment are specified in the Enforcement and Bankruptcy Law.

Precautionary Attachment Conditions are regulated in Article 257 of the Execution and Bankruptcy Law (“Law”). In order to be able to give a precautionary attachment decision according to the Law, the receivable of money arising from a valid contract is not pledged and the maturity of the money receivable shall be sufficient. On the other hand the existence of a receivable arising from a contract established as valid for a creditor that is not yet due, the receivable not being provided by pledge and a state of danger in its delay needs to be approximately proven.

The Law give examples of situations where there is danger in delay. These examples are; the debtor does not have a specific settlement or the debtor has the intention of smuggling property, the debtor’s behavior towards smuggling property or committing fraudulent transactions in a way that violates the rights of the creditor. Although the conditions of the precautionary attachment are so precisely and clearly stated. Today, especially in loan agreements with banks, the debtor’s immovables are mortgaged or even if the mortgaged debt certificate and the certificate of income are issued, if the debt mentioned is not paid, a precautionary lien is applied on all assets of the debtor by taking a precautionary attachment decision from the court.

3. Can’t a precautionary attachment be decided for any pledged receivables?

It could be possible. That is, the pledge (usually mortgage in daily life) is a very strong in-kind guarantee. The creditor, whose receivable is secured with a pledge, is primarily the creditor. The creditor, whose receivables are secured with a pledge, is primarily the creditor and the creditor has the ability to collect his receivables before all creditors. For this reason, the Law did not consider it appropriate for the creditor holding such a right to request a lien.

If there is a money receivable secured with a pledge, first of all, enforcement proceedings are applied by converting the mortgage into money. However, if the pledge does not guarantee all the receivables, in other words, if the pledge is TRY 50.000 and the receivable is TRY 80.000, a precautionary attachment can be decided against the amount equivalent to the money receivable that is not under guarantee. If we need to repeat, first of all, enforcement proceedings should be applied by liquidating the mortgage.

4. Is that possible, a precautionary attachment decision be made on the assets of the guarantors?

The Supreme Court stated that if the pledge is secured with a pledge of movable pledge or pledge of receivables, it cannot be applied to the guarantor before the pledge is liquidated. But, the judge determines in advance that the receivable cannot be fully compensated by liquidating the pledge or bankruptcy of the debtor or in cases where concordat is given, the guarantor can be applied before the pledge is converted into money. However, the pledge that constitutes a guarantee not to apply to the surety is also given for the debts of the surety, in other words, if the debt of the surety is not secured with a pledge, it is possible to decide on a precautionary attachment on the surety’s assets.

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