Turkey’s strained economy has left hundreds of companies on the verge of bankruptcy and forced to seek legal protection in the year 2018, Laura Pitel of the Financial Times reported.

The Turkish trade minister, Ruhsar Pekcan, announced this month that a total of 846 companies had applied to Turkish courts for bankruptcy protection, a legal measure that allows them to restructure debts to avoid full bankruptcy. However, the real number, Pitel quoted analysts as saying, could be several times higher, according to Ahvalnews.

This year has seen the Turkish lira plummet against the dollar by around 30 percent, at one point in the summer reaching crisis levels as tensions with the United States sent the lira down over 40 percent. Meanwhile, inflation peaking about 25 percent in the last quarter has also driven prices and interest rates up, leaving many companies struggling to survive.

The new form of bankruptcy protection, called “konkordato” in Turkish, was introduced last February and has already been deemed necessary by a great deal of companies throughout the country, including some of its best-known companies.

A company owner interviewed by Pitel described having to lay off 150 staff members and apply for bankruptcy protection after finding himself unable to service the interest on debts worth millions of lira.

The owner believes that bankruptcy protection will grant him the time needed to sell off assets and pay his debts. “Otherwise I would have just declared bankruptcy,” he said.

Others, however, see the widespread use of bankruptcy protection as no better than a stop-gap.

“If the economic situation gets worse, konkordato won’t be a solution … It will end in bankruptcies,” Pitel quoted accountant and journalist Nedim Turkmen as saying.”

Last Update: Wednesday, 20 May 2020 KSA 09:52 - GMT 06:52