Turkiye Extends Financial Restructuring for Companies: What the Extension of Banking Law Provisional Article 32 Means for Your Business

In a significant move to support corporate financial stability, the Turkish Presidency has officially extended the duration of the Financial Restructuring (FYY) framework. According to the Presidential Decision No. 10765, published on December 24, 2025, the provisions of Provisional Article 32 of the Banking Law (No. 5411) with regard to corporate debt restructuring have been extended for an additional two years.

This extension provides a vital window for companies facing liquidity issues to reorganize their debts with banks and financial institutions under highly favorable legal and tax conditions.

What is Provisional Article 32 of the Banking Law?

Provisional Article 32 serves as a legal bridge for companies that are currently experiencing financial distress but remain economically viable. The primary goal is to enable these debtors to fulfill their repayment obligations while protecting employment and production capacity.

Under this article, banks, leasing companies, factoring firms, and other financial institutions can restructure the debts of corporate borrowers through Framework Agreements prepared by the Banks Association of Turkey (TBB).

Key Highlights of the 2025 Extension (Decision No. 10765)

The latest Presidential Decision ensures that the restructuring mechanism remains active through 2026 and 2027. This is crucial for businesses navigating the current global economic climate.

1. Eligibility: The “Repayment Capacity” Requirement

Not every company can apply for restructuring. To qualify:

• The debtor’s financial status must be analyzed by independent audit firms or the creditor institutions.
• It must be determined that the company will gain the ability to repay its debts after the restructuring. Zombie companies with no hope of recovery are excluded.

2. Available Restructuring Tools

The law provides creditors with a broad toolkit to save the debtor company, including:

• Maturity Extensions: Prolonging the repayment period.
• New Credit Lines: Granting additional loans to provide liquidity.
• Debt Reductions: Lowering principal, interest, or default interest rates.
• Debt-to-Equity Swaps: Converting debt into company shares.
• Asset Transfers: Transferring assets to creditors to settle debts.

Major Tax Exemptions and Incentives

One of the most compelling reasons for companies to pursue restructuring under Provisional Article 32 is the extensive tax relief it provides:

• Stamp Duty & Fees: Agreements and documents are exempt from stamp duty and all judicial/administrative fees.
• BSMV (Banking and Insurance Transaction Tax): Amounts collected by creditors are exempt from BSMV.
• KKDF: Credits used within this scope are exempt from the Resource Utilization Support Fund.
• Corporate Tax & VAT: Significant exemptions apply to the transfer of assets and the gains derived from these sales.

Legal Protection: Immunity from “Embezzlement”

A unique feature of this article is the protection it offers to bank executives. Restructuring operations—even those involving debt write-offs or collateral reductions—do not constitute the crime of Embezzlement under Article 160 of the Banking Law. This encourages financial institutions to be more flexible and pragmatic during negotiations.

Why Should Your Company Act Now?

The extension granted by Decision No. 10765 is a time-limited opportunity. Navigating the Financial Restructuring Framework Agreements requires deep legal expertise in banking law, tax regulations, and corporate negotiation.

At Karacabey Legal, we specialize in guiding companies through the complexities of debt reorganization, ensuring that the restructuring agreements are sustainable and legally sound.

Contact Us To learn more about how your company can benefit from the extension of Provisional Article 32, visit our website at karacabey.av.tr or contact our legal team for a consultation.

Legal Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice, professional counsel, or a binding legal opinion. While we strive to ensure the accuracy of the content based on the this article, laws and regulations are subject to change and interpretation. Accessing this article does not establish an attorney-client relationship between the reader and Karacabey Legal. We recommend consulting with a qualified attorney regarding your specific legal situation or compliance obligations before taking any action based on this content.