Creditor Rights in Company Mergers and Divisions in Turkey

When a Turkish company merges with another or splits its operations across several companies, the banks, suppliers and other creditors it owes money to face real uncertainty: the legal entity behind the debt may change, assets may be divided, or the obligation may be reassigned to an entirely different company. To balance this risk, the Turkish Commercial Code (TCC, Law No. 6102) gives creditors a dedicated set of protections. This guide does not cover the transaction mechanics of a merger or division — those are addressed in our separate M&A guide on due diligence, the share purchase agreement and closing — but focuses solely on what creditors are entitled to when such a transaction occurs.

The Legal Basis for Creditor Protection

The TCC secures creditor rights through two core instruments: the right to demand security and joint liability. Creditor protection in mergers is governed by TCC art. 157-158, and in divisions by art. 174-176. Both regimes share a common logic: the creditor must be given notice of the transaction (publication) and an opportunity to have the claim secured. The point is to preserve, for a defined period, the reliance the creditor placed on the company's original assets — even after the transaction has validly closed.

Creditor Rights in a Merger

Under TCC art. 157, the companies participating in a merger must inform their creditors of their rights through a notice published three times at seven-day intervals in the Turkish Trade Registry Gazette, and additionally on their websites. This publication requirement is the procedural safeguard that lets a creditor learn of the transaction and act in time.

Once the notice is published, if creditors come forward within three months of the merger becoming legally effective, the acquiring company must secure their claims. Alternatively, the obligated company may pay the debt outright instead of providing security, provided it is established that other creditors will not be harmed.

TCC art. 158 adds a second layer. Partners who were personally liable for the debts of the transferred company before the merger remain liable afterwards — provided the debt arose before the merger resolution was published. Claims based on this personal liability become time-barred three years after the publication date; where a claim falls due after publication, the limitation period runs from the maturity date. For publicly issued bonds, liability continues until redemption.

Creditor Rights and Joint Liability in a Division

A division carries a higher risk for creditors because the company's assets are distributed among several entities. TCC art. 174 requires the companies participating in the division to call on their creditors — in the same manner as in a merger, through a notice published three times at seven-day intervals in the Trade Registry Gazette and on the website — to report their claims and demand security.

Under TCC art. 175, the participating companies must secure the claims of creditors who come forward within three months of the date the notices are published. Note an important difference in when the clock starts: in a merger the period runs from the transaction becoming effective, whereas in a division it runs from the publication date.

The creditor's strongest safeguard in a division is joint liability. Under TCC art. 176, the company to which the debt is allocated by the division agreement is liable in the first degree; if that company fails to perform, the other companies participating in the division become liable in the second degree, jointly and severally. However, these second-degree companies can only be pursued if the claim was not secured and one of the statutory conditions is met — for example, the first-degree company has become insolvent, obtained a composition (concordat), met the conditions for a certificate of definitive insolvency, or moved its seat abroad so that it can no longer be pursued in Turkey.

How This Interacts With Due Diligence

These statutory protections do not replace the buyer's legal and financial due diligence — they complement it. The due diligence discussed in our M&A guide mainly protects the buyer against a target company's hidden liabilities; the TCC's creditor provisions protect the existing creditor against the transaction itself. An experienced transaction lawyer plans the publication timetable, potential security demands and joint-liability exposure from the outset when drafting the merger or division agreement; otherwise, creditor claims surfacing after closing can delay the deal and raise its cost.

A Practical Guide for Foreign Creditors

A foreign bank that has lent to a Turkish company, or a foreign supplier selling to one, often learns late that its debtor is undergoing a merger or division. To protect your position:

• Monitor the Trade Registry Gazette: notices are published there. Building a change-of-control / notification obligation into your contracts is the most effective early-warning tool.
• Do not miss the deadlines: a security demand must be made within three months — from the transaction becoming effective in a merger, and from the publication date in a division.
• Submit the demand in writing and in provable form: a notary demand letter or a written application capable of registration is preferable.
• Map the joint liability: in a division, identify which company the debt was allocated to and which companies bear second-degree liability.

Frequently Asked Questions

Can I stop the transaction by objecting to the merger? No. A creditor's right is not to block the transaction but to have the claim secured. The deal can validly proceed; the creditor's protection comes through the security demand and joint liability.

What happens if I miss the security-demand deadline? Once the three-month window closes, the right to demand security generally lapses. However, partners' personal liability in a merger (art. 158) and joint liability in a division (art. 176) offer additional routes that may be available under specific conditions.

Can the company pay my debt instead of providing security? Yes. Both art. 157 and art. 175 allow the company to pay the debt directly instead of posting security, provided it is established that other creditors will not be harmed.

Does a foreign creditor enjoy these rights equally with a Turkish creditor? Yes. The TCC draws no distinction based on nationality in creditor protection; foreign banks, suppliers and bondholders are subject to the same deadlines and rights.

How Mona Hukuk Can Help

At Mona Hukuk, we support the domestic and foreign creditors of a Turkish company undergoing a merger or division with monitoring of publications, timely security demands, joint-liability analysis and, where necessary, litigation and enforcement. We equally advise companies carrying out these transactions on planning their creditor-protection obligations correctly from the start.

For advice in Antalya, write to contact@monahukuk.com or call +90 (242) 606 14 32.