Ian Jack


The concept of “financial restructuring” was introduced in Turkey following the country’s currency crisis in the summer of 2018. Financial restructuring, defined as revising a debtor’s financial structure and redetermining its financial strategy, became the major agenda item for Turkish financial institutions. Regulators intervened immediately and began working to create a legal  framework for restructuring. The aptly named “Framework Agreement” that entered into force as a result of the joint efforts of the Banking Regulatory and Supervisory Authority (the “BRSA”) and the Banks Association of Turkey (the “BAT”) was of particular importance. Nevertheless, we observe that restructurings commenced pursuant to the Framework Agreement have been progressing very slowly and in most cases have reached an impasse. While analysing the reasons behind that slow progress, we compared the concepts behind the Framework Agreement with those in some well-known international restructuring regimes such as Chapter 11 (US) and Administration and Scheme of Arrangement (UK), in order to identify the obstacles two effective financial restructuring in Turkey.

On July 27, 2017, Andrew Bailey, the chief executive of the UK Financial Conduct Authority (FCA), announced in a speech that after 2021 the FCA would no longer use its power to persuade or compel panel banks to submit rate information used to determine LIBOR. Mr. Bailey encouraged the market to develop robust alternative reference rates to replace LIBOR.

This speech marks a turning point in the history of LIBOR. Regulators have been concerned that LIBOR may cease to exist as a financial benchmark, and that such cessation could cause significant disruption to the market. Mr. Bailey’s announcement of an arbitrary deadline has caused market participants to look anew at replacing references to LIBOR in a large number of financial contracts with references to alternative reference rates now being developed, and to reconsider LIBOR fallback language currently contained in existing contracts. Mr. Bailey’s remarks also indicate that the reform of LIBOR, which had been a regulatory goal, is no longer a viable option in the FCA’s view.