Pursuant to Article 376/3 of the Commercial Code, where there are signs that a company is in financial distress, its board of directors should prepare an interim balance sheet. If the balance sheet verifies that the company is in financial distress, the board should notify the first-instance commercial court where the company is headquartered and request a bankruptcy declaration. Directors of boards which fail to follow these steps could be held civilly or criminally liable.
The Communique on the Procedures and Principles regarding the Application of Article 376 of the Commercial Code recently came into force. It determines the procedures and principles that will apply to certain companies (ie, joint stock companies, limited liability companies and limited partnerships whose capital is divided into shares) in cases of capital loss and insolvency.
The Law amending the Enforcement and Bankruptcy Law and Other Laws recently came into force. The most significant amendments introduced to the Enforcement and Bankruptcy Law are the abrogation of the postponement of bankruptcy procedure and the adoption of a more efficient and functional structure for the composition with creditors procedure, which is a court-approved agreement between debtors and creditors.