PROCEDURE FOR CHARGES IN SEIZURE

A. GENERAL INFORMATION
Although the debtor is the addressee of the enforcement proceedings, property believed to belong to the debtor but belonging to third parties can also be seized. The enforcement officer, taking into account the principle of order in seizure, may only seize property whose seizure is not prohibited by law. This principle serves not to collect the debt under any circumstances, but rather to establish a balance of interests between the creditor and the debtor. The enforcement officer has no other discretion and cannot assess whether the seized property actually belongs to the debtor.
SEQUENCE IN SEIZURE: Only the debtor's property can be seized to the extent that it covers the principal and interest of the debt, as well as the enforcement expenses; no more can be seized (Article 85, I). However, when seizing sufficient property to cover the debtor's debt, it is necessary to begin with the property whose absence will least burden the debtor and is easiest to seize and sell. In other words, when seizing a debtor's property, a specific order is observed, which is called the order of seizure. Disputed property refers to property declared by the debtor to be owned by someone else, according to Article 96. Disputed property refers to property seized or claimed as property by third parties as a precautionary measure. Otherwise, property to which no one else has any claim is considered non-contested property.
When seizing, according to Article 85 of the Enforcement and Bankruptcy Code (EBL):
1. Uncontested property: If these are insufficient to cover the debt,
a. Movable Property
b. Immovable Property
2. Contested property shall be seized.
Uncontested Property: Since uncontested property is property over which no one else has any real or personal claim, the property that is least costly to seize, easy to store and sell, and least likely to be perceived as a loss by the debtor in the event of seizure shall be seized first in the seizure. Money, gold, silver, the debtor's receivables from third parties, and other movable assets are then seized in the order of the seizure of their real estate, in an amount sufficient to cover the debt. During seizure, the assets are recorded against the appraised value, and the seizure is carried out in the seizure report in the amount of the receivables and their accessories.
Contested Assets: As previously mentioned, Article 85 of the Enforcement and Bankruptcy Code (EBL) does not provide a clear definition of the order of seizure. However, it does specify that contested rights will be seized after uncontested rights. Rights claimed as rights or established as pledges on contested rights may also be subject to interim measures.
• When seizing, according to Article 85 of the Enforcement and Bankruptcy Code, uncontested assets are seized first; if these are insufficient to cover the debt, the contested assets are seized. If contested assets belonging to the debtor are seized during the seizure, the property claimed as rights to the contested assets, and the procedure employed to free these assets from seizure, is called a lawsuit for recovery. • If the property is seized while in the possession of a third party and it is claimed that the property does not belong to the debtor, a lawsuit for recovery is filed, but in this case, it is claimed that the property belongs to the debtor, not that the property is freed from seizure. (99)

When a debtor's property is seized, property believed to belong to the debtor may also be seized. The term "seized property" includes the debtor's movable and immovable property, as well as any rights and receivables held by third parties. According to Article 85 of the Enforcement and Bankruptcy Code (EBL), a seizure must be made for the portion of the debtor's property sufficient to cover the debtor's debt. A claim of entitlement is made that a person other than the debtor has a right to the property. If a claim of entitlement exists, the right is disputed, so the appropriate remedy is a lawsuit for entitlement. In other words, when the debtor or a third party claims that the seized property does not belong to the debtor, this constitutes a lawsuit for entitlement. This claim may also concern rights other than ownership or lien rights. The EBL does not provide a restrictive definition on this matter. Thus, "the subject of a lawsuit for entitlement is to determine whether the seized property belongs to the debtor or a third party."

• Article 85 of the Enforcement and Bankruptcy Code (EBL). In a lawsuit filed by the debtor or a third party under procedure 97, if it is not determined that the property belongs to the debtor, the seizure will be continued; if it is determined that the property belongs to a third party, the seizure will be lifted. (At the debtor's address)
• In a lawsuit filed by the creditor under article 99 of the Enforcement and Bankruptcy Code, if it is determined that the property belongs to the debtor, the seizure will be continued; if the decision is to the contrary, the seizure will be lifted.
• Therefore, since a claim for entitlement is generally resolved through a claim for entitlement, the existence or non-existence of the claimed right will be resolved through this lawsuit.

B. RIGHTS THAT MAY BE SUBJECT TO A RECOGNITION ACTION

1. Right of Property
2. Right of Lien (Arising from the Law on Movable Liens in Commercial Transactions, Arising from Ship Liens)
3. Rights of Claim
4. Rights with Strengthened Effects Annotated in the Land Registry
5. Rights of Pre-emption, Purchase, and Redemption Arising from Contracts
6. Comparison of the Annotation on Personal Rights and the Annotation on Restriction of Disposition (Seizure) (TCC Articles 1009 and 1010)
7. Lease Agreement Annotated in the Land Registry
8. Promise to Sell Real Estate
9. Rights Arising from a Financial Lease Agreement
Rights Arising from a Reservation of Title Agreement

C. LEGAL NATURE

The Constitutional Court, 2010/90 E. 2012/4 K. 12.01.2012 T: In a case reviewed through objection, the Court made the following determination regarding a claim of ownership: “Despite the third party claiming ownership, these properties may be seized due to legal obligation, but the claim of ownership is recorded in the seizure report. The ownership of the properties is determined through the filing of a claim of ownership lawsuit.”

Y.HGK, 2017/12-347 E. …/837 K. 02.07.2019 T. In a recent decision, the General Assembly of Civil Chambers of the Court of Cassation made various determinations regarding a claim of ownership lawsuit, characterizing a claim of ownership lawsuit as a lawsuit filed to save the properties claimed for entitlement from seizure. The enforcement officer cannot conduct an ownership investigation to determine the ownership of the property when a claim of ownership is made. Depending on who owns the property, Article 10 of the Enforcement and Bankruptcy Code (EBL) is regulated. It is expected that the 97 or 99 procedure will be followed. This is because the determination of ownership of the property requires a trial.

D. PROCEDURE FOR ASSERTION IN LIEN

A three-fold distinction can be made regarding the lien procedure:

1. Distinction: The property to be seized must be in the possession of the debtor. (96-97)
2. Distinction: The property must be in the possession of a third party together with the debtor. (96-97)
3. Distinction: The property must be in the possession of a third party.

While the same procedure applies for the first two cases, a different procedure applies if the property is in the possession of a third party.

1. THE SEIZED PROPERTY IS IN THE HANDS OF THE DEBTOR (OR A THIRD PARTY TOGETHER WITH THE DEBTOR) (Articles 96-97)

a. The third party initiates the lien lawsuit, which is initiated as a result of the third party claiming lien. The third party is the plaintiff. The defendant is the creditor.

i. If, during the seizure of property held by the debtor, the property is presented as another person's property or lien, or if such a claim is made by a third party, the enforcement officer shall record this claim in the minutes.
ii. (If they are not present at the time/during the seizure) The third party who learns of the seizure of property shall claim entitlement within seven days from the date of learning of the seizure. Otherwise, they shall lose the right to assert this claim in the same proceeding.
iii. The enforcement officer shall notify both parties of the third party's entitlement claim.
iv. Objecting to the Entitlement Claim: If the creditor or debtor objects to the third party's entitlement claim (within the enforcement office) within the three-day period granted from the date the third party of the enforcement office notifies the enforcement office of the entitlement claim (the entitlement notification document is served), the enforcement office cannot make a decision on this matter and will send the file to the enforcement court (Article 97/1).

v. The enforcement court will first decide, on its own initiative, whether to continue or postpone the enforcement proceedings (with security provided - Article 36 of the Enforcement and Bankruptcy Code (Articles 97/1, 97/3-4). This decision is final. This postponement applies only to the property claimed as entitlement. Duration: Generally, the Enforcement and Bankruptcy Code (Article 97) sent to the enforcement court grants its stay or continuation of the proceedings very quickly, with a final outcome of 2-7 days. The grounds for decisions to continue the proceedings are generally: The tax certificate and company stamp belong to the debtor company, or the debtor's presence at the seizure site. A third party must file a lawsuit for entitlement within the seven-day limitation period following the enforcement court's decision.

No Objection to Entitlement Claim: If neither the creditor nor the debtor object to the entitlement claim within three days, they are deemed to have accepted the entitlement claim. In this case, the property is treated along with the third party's claim. If this claim is a claim of ownership, the seizure is lifted, and the property is transferred to the third party.

b. RETENTION CASE
 A claim for entitlement is heard in accordance with general provisions and a simplified trial procedure is applied (Article 97/XI). Although the case is heard in accordance with general provisions, the Law introduces special rules of proof for this case.
 The third party claimant for entitlement is obligated to demonstrate and prove how they acquired the property and the legal and factual reasons and events that necessitate the property being in the debtor's possession (Article 97/a, II).
 Otherwise, the debtor who holds the movable property is deemed its owner. The third party plaintiff must prove the contrary (Article 97/a, I, section 4).
 If the debtor and the third party hold the property together, the property is considered to be in the debtor's possession. However, the Law introduces certain presumptions in favor of third parties. Among the properties in the places where the debtor resides, those that are clearly understood to belong to women, men, or children, or those related to customs, traditions, trades, professions, or occupations, are deemed to be these persons. Anyone claiming otherwise must prove it (Art. 97/a, I, c. 2, 3).

In this case, the enforcement judge may hear witnesses, have an expert examine the property, and freely evaluate the evidence.

The debtor's acceptance of a third party's entitlement claim does not affect the creditor. In other words, despite the debtor's admission, the third party must prove their claim.

If the seized property is sold and converted into cash because a decision to postpone the enforcement proceedings is not issued before the entitlement case is concluded, the court will also decide whether the sale price will not be paid until the end of the trial or whether it will be immediately given to the creditor, either in exchange for collateral or, as the case may be, without collateral. If the third party fails to file a lawsuit for recovery within seven days of the issuance or notification of the decision to postpone the enforcement proceedings, the third party is deemed to have waived their claim of recovery against the creditor who initiated the seizure, and the creditor may request the sale of the property (Article 97/VI).

However, the third party is not deemed to have waived their claim of recovery against the debtor, but may file a lawsuit for unjust enrichment against the debtor.

c. RESULT OF THE CASE

i. If the enforcement court finds the third party plaintiff in favor, it will accept the lawsuit. If the right claimed by the third party is a limited real right, the seizure will continue without prejudice to the third party's rights. If the property right is at stake, the seizure will be lifted. In this case, if the objecting creditor or debtor is found to have acted in bad faith, they will be awarded compensation not less than 15% of the value of the seized property.

ii. If the enforcement court finds the third party's claim for recovery to be unjust, it will dismiss the claim. This decision finalizes the seizure of the property, and if a postponement of enforcement proceedings was previously ordered, compensation will be awarded to the plaintiff in the amount of not less than 20% of the amount delayed due to the lawsuit.

2. THIRD-PARTY POSSESSION OF THE SEIZED PROPERTY (Article 99)

Article 99 – If the seized property is not in the possession of the debtor but is held by a third party who claims ownership or other real rights over it, the property will not be taken into custody if this person accepts seven safeguards. The enforcement officer will grant the creditor seven days to file a claim for recovery against the third party in the enforcement court. If the claim for recovery is not filed with the enforcement court within this period, the third party's claim will be deemed accepted. The seized property cannot be sold until the lawsuit filed by the creditor is concluded. This paragraph also applies if the seizure is carried out in the absence of the third party and if a claim of entitlement is made in favor of the third party.

Article 88 – (Amended: 2/7/2012-6352/17 article) The enforcement office shall preserve the seized currency, banknotes, bearer bonds, bills of exchange, other negotiable instruments, as well as gold, silver, and other valuables.

Other movable property shall be placed in safekeeping, with the cost collected from the creditor in advance. If the creditor consents, it may be temporarily placed in the custody of the debtor or a third party, provided that it is given at any time. When movable property in the possession of a third party is seized, it shall be placed in safekeeping with the third party as trustee upon the third party's acceptance. (Amended sentence: 24/11/2021-7343/7 Art.) Seized but not placed in safekeeping shall be placed in safekeeping upon request for sale or made available for delivery to the tender buyer; otherwise, the sale shall not be made. (Additional sentence: 24/11/2021-7343/7 Art.) The provisions of Article 106 are reserved for registered motor land vehicles.

1-) STORAGE: If a property in the possession of a third party is alleged to belong to the debtor, this property shall also be seized; When movable property in the hands of a third party is seized, it is left to the third party as trustee if the third party accepts it (Article 88/II, Article 99, Section 1). While Article 88/II, Section 2 stipulates that the creditor's consent is also required, this provision should be considered in conjunction with the next sentence of the same article and the first sentence of Article 99, and the third party's acceptance of the trusteeship should be considered sufficient. In other words, if the seized property is in the hands of a third party and the third party has a claim of entitlement to it, the property is seized but cannot be taken from the third party. (In Article 97, both seizure and preservation are permitted.) However, if the third party wishes to surrender the property, the property can be seized in person. If they do not wish to do so, the property is left to the third party as trustee.

2-) ACTION: When property in the hands of a third party is seized, the creditor is given a seven-day period to file a lawsuit for entitlement. The enforcement officer who seized the property gives the creditor a seven (7)-day period to file a lawsuit against the third party in the enforcement court to reject the claim. However, the creditor may file a lawsuit without waiting for this period. The period begins from the date of notification or notification of the seizure to the creditor. If the creditor fails to file the lawsuit within this period, the third party is deemed to have accepted the third party's claim, and the seizure on the property is lifted.

a. Case Result: If property held by a third party is seized and a lawsuit for seizure is filed, proceedings will not continue until a decision is reached. If the creditor loses the lawsuit, the seizure on the property will be lifted. If the lawsuit is concluded in favor of the claimant, the property will be seized from the third party and, upon the creditor's request, will be sold and the creditor will receive the receivable.
b. If the creditor files a lawsuit to reject the claim, the seized property will not be sold until the lawsuit is concluded. This provision also applies if the seizure is carried out in the absence of a third party and a claim of entitlement is made in favor of the third party.

c. In this case for the rejection of the entitlement claim, the provisions of Article 97 apply, except for its specific characteristics. This case differs from Article 97 in that the plaintiff is the creditor and the defendant is a third party. However, due to the lack of regulation in this case, the provisions regarding compensation in Article 97 will not apply. It is possible to apply to general compensation provisions.

 The final decision regarding the enforcement officer's authority to search documents at the scene of the seizure is as follows:

In the specific case, it appears that the enforcement officer carried out the seizure at the indicated address and conducted a document search upon request. Article 80 of the Enforcement and Bankruptcy Code targets the debtor, and the actions taken were taken against the debtor. If a third party claims that the seized premises do not belong to the debtor, the enforcement officer must record their statements in the record and follow the procedures outlined in Articles 96 and subsequent Articles of the Enforcement and Bankruptcy Code. Whether the enforcement officer will take action pursuant to Articles 96 and 99 of the Enforcement and Bankruptcy Code can only be clarified after a document search. Since both the complaint under Articles 96 and 99 of the Enforcement and the entitlement claim are separate lawsuits, conducting a document search at the premises currently claimed to belong to the debtor is not contrary to procedure or law.

Y. 8. HD. 2019/4898E. 2021/2776 K. March 25, 2021, T: In the enforcement proceedings underlying the lawsuit, the payment order was served at a different address than the seizure address, and the debtor was not present at the address during the seizure. The land registry record in the file indicates that the seizure address was purchased by a third party on June 8, 2014, and a third party's active presence at the address was determined by the inspection slip dated November 27, 2014. The factoring agreement and promissory note underlying the enforcement proceedings are dated October 16, 2015, and the file indicates that the plaintiff was active at the address before the debt arose. Considering that the debtor's documents found on the third party's computer during the seizure were identified as originating from a current account relationship with the debtor, the document indicates that the debtor's address is not the seizure address but the address registered in the trade registry as a natural person merchant, and that the debtor currently operates in Kocaeli with a current tax record, the fact that the address on the contract and promissory note underlying the enforcement proceedings is shown as the seizure address cannot be considered sufficient to establish that the address belongs to the debtor. In this case, the presumption of ownership stipulated in Article 97 of the Enforcement and Bankruptcy Code (EBL) must be accepted as being in favor of the third party. The creditor, who bears the burden of proof and has the opportunity to refute the presumption with all available evidence, has presented the debtor's collusive transactions to smuggle goods through the third party, the debtor's file found on the computer at the time of the seizure, and the fact that the seizure address is listed on the contract underlying the enforcement proceedings as evidence of the collusion. However, the evidence presented by the creditor is not sufficient to refute the presumption of ownership in favor of the third party. Therefore, considering these material and legal facts, the Regional Court of Justice's decision to reject the case, instead of accepting it on the grounds that it was inconsistent with the facts and the contents of the case file, was incorrect.

Certain criteria to be used in determining organic connection (HGK. 2012/1333E. 2013/426K. 03.04.2013 T.):
1. The seizure in question must be made at the same address as the payment order,
2. It must be made in the presence of an official of the debtor company,
3. The founding partners of the third-party plaintiff and the debtor company are the same person and related,
4. Both companies operate in the same business,
5. There is no invoice indicating that the assets belong to the third party;
6. The tax accrued due to the invoice related to the lease being issued after the legal deadline and the seizure date is paid after the seizure date with a penalty.
7. The payment receipts are ordinary written documents not recorded in the ledger.
8. The cylinder listed in the fixed assets ledger has no characteristics that would allow us to identify it as the seized property. These are some of the criteria used to determine an organic connection.

NOTE: There is a Supreme Court decision stating that the representation of the debtor and the third party claiming entitlement by the same attorneys as attorneys demonstrates the existence of an organic connection. (Y.8. HD. 2014/21107 E. 2014/21975 K. 08.12.2014 T.)

STJ. ATTORNEY ECENUR ÖZALP
U&T Law - U&T Law and Consulting