Introduction

The closure of bankruptcy marks the end of the liquidation process for a debtor's assets. Once bankruptcy proceedings are finalized, the debtor’s legal status changes significantly. This article explores the process of closing bankruptcy in Turkey, including the rights and obligations of the debtor, and what happens after the bankruptcy is closed.

Finalization of Liquidation:

• The bankruptcy process begins with the liquidation of the debtor’s assets to repay creditors. Once all assets have been sold and the proceeds distributed according to the priority of claims, the bankruptcy estate is considered closed.
• The bankruptcy administrator submits a final liquidation report to the court, detailing the assets sold, the amounts distributed, and any remaining debts.

Court Decision:

• The closure of bankruptcy is formalized by a court decision. The commercial court reviews the liquidation report and, if satisfied with the proceedings, issues a decision declaring the bankruptcy closed.
• Creditors are notified of the decision, and no further claims can be made against the debtor unless new assets are discovered post-closure.

Discharge of Debts:

• Once bankruptcy is closed, the debtor is typically discharged from any remaining debts that could not be repaid through the liquidation process. This means that creditors cannot pursue additional enforcement actions for these debts, and the debtor is legally free from liability for them.
• However, certain debts, such as those arising from fraud or criminal acts, may not be discharged and can continue to be pursued.

Restoration of Civil Rights:

• In many cases, bankruptcy imposes certain restrictions on the debtor’s civil rights, such as the ability to manage a business or serve as a company director. After the bankruptcy is closed, these rights are generally restored, allowing the debtor to engage in business activities once again.

Rehabilitation of the Debtor’s Reputation:

• Following the closure of bankruptcy, the debtor’s reputation is often rehabilitated in the eyes of the law. The debtor is no longer considered insolvent, and any stigma associated with the bankruptcy is mitigated over time, particularly if the debtor successfully complies with all legal obligations during the process.