What is Precautionary Seizure?
Precautionary seizure is a legal measure that allows a creditor to secure their receivables against the risk of the debtor hiding or disposing of their assets. Regulated under Articles 257-268 of the Enforcement and Bankruptcy Law (EBL), this measure restricts the debtor’s ability to manage their assets to protect the creditor’s rights. However, precautionary seizure alone does not grant the creditor the right to sell the seized assets.
This measure does not constitute a definitive legal ruling but serves as a security mechanism based on the approximate proof of the existence of a debt. By preventing the debtor from selling or transferring their assets, it aims to ensure the creditor's ability to collect their debt in the future.
Precautionary seizure is crucial in preventing the creditor from incurring financial losses and stopping the debtor from engaging in fraudulent transactions to hide assets. Especially in commercial receivables, precautionary seizure orders are considered an effective legal tool to maintain control over the debtor’s financial situation.
Subject of Precautionary Seizure
As a general rule, precautionary seizure applies to matured and unsecured monetary debts. However, Article 257 of the EBL allows precautionary seizure to be requested for unmatured debts in certain cases:
If the debtor does not have a fixed residence,
If the debtor is attempting to conceal, transfer, or escape with their assets.
If these conditions exist, the creditor can request a precautionary seizure order.
Precautionary seizure can be applied not only to movable and immovable properties but also to the debtor's bank accounts, claims from third parties, and commercial rights. This allows the creditor to seize various assets of the debtor to increase the likelihood of debt recovery.
Filing a Precautionary Seizure Request
A creditor must file a precautionary seizure request with the competent court. In this request, the creditor must provide supporting evidence proving the existence of the debt. The court, when granting a precautionary seizure order, issues a temporary protective measure rather than a final ruling.
In the request, the creditor must clearly state the nature and amount of the debt, as well as the legal relationship between the creditor and the debtor. Incomplete or insufficient applications may be rejected by courts. Therefore, creditors must carefully follow the legal procedures.
Precautionary Seizure and Collateral
Generally, a creditor must provide collateral when requesting a precautionary seizure. This collateral serves to compensate for any potential damages that the debtor or third parties may suffer due to the seizure. However, if the debt is based on a court ruling, collateral may not be required.
The court determines the amount of collateral, which usually depends on the debt amount. Collateral can be in the form of cash, a bank guarantee letter, or a mortgage over immovable property.
Competent and Jurisdictional Court
The court responsible for handling precautionary seizure requests depends on the legal relationship between the creditor and debtor. Generally, the following courts may have jurisdiction:
The competent court is usually the court where the debtor resides or where the debt originated. Adhering to jurisdiction rules is crucial when filing a precautionary seizure request.
Termination, Removal, or Invalidity of Precautionary Seizure
Precautionary seizure may terminate, be lifted, or become invalid under certain conditions. These conditions include:
Objection to the Precautionary Seizure Decision: The debtor may object to the seizure decision. The court will review the objection and may either revoke or uphold the seizure.
Removal by Providing Collateral: The debtor may apply to the court for the removal of the seizure by providing adequate collateral.
Becoming Invalid Due to Expiration: If the creditor does not initiate enforcement proceedings within 10 days from the court decision, the precautionary seizure automatically becomes invalid.
Full Payment of the Debt by the Debtor: If the debtor fully pays the debt, the precautionary seizure is lifted.
Creditor’s Withdrawal of the Lawsuit: If the creditor withdraws the lawsuit on which the precautionary seizure is based, the seizure becomes invalid.
In cases of termination, removal, or invalidity of precautionary seizure, the enforcement office must be notified accordingly, and the legal process must be completed properly.
Execution of the Precautionary Seizure Decision
Once the court grants a precautionary seizure order, the creditor must apply to the enforcement office within 10 days to have the order executed. If this period expires, the order automatically becomes invalid.
Precautionary seizure is enforced by enforcement officers. The debtor’s assets are identified, the seizure is implemented, and the debtor is duly notified.
Unjust Precautionary Seizure and Compensation
If the creditor is found to have unjustly requested a precautionary seizure, the debtor and affected third parties may claim compensation. The creditor's liability for damages is not based on fault; rather, those who suffer losses may file a lawsuit seeking compensation.
Debtors who suffer from an unjust precautionary seizure may file a lawsuit for compensation. These lawsuits are typically filed due to loss of reputation, disruption of business activities, or unnecessary seizure of assets.
Supplementary Procedures and Conversion of Precautionary Seizure into Final Seizure
As previously explained, precautionary seizure is not a final seizure. Therefore, it does not grant the creditor the right to sell the seized assets. To obtain this right, the creditor must complete the supplementary procedures and convert the precautionary seizure into a final seizure.
Return of Precautionary Seizure Collateral
If enforcement proceedings against the debtor become final, or if the creditor waives the seizure or the seizure becomes invalid, the creditor may apply to the court for the return of the provided collateral. The return of the collateral is subject to the condition that no compensation claims have been filed by the debtor or third parties.
Differences Between Precautionary Seizure and Precautionary Measures
Legal Basis: Precautionary seizure is regulated under the Enforcement and Bankruptcy Law, whereas precautionary measures fall under the Code of Civil Procedure.
Scope: Precautionary seizure applies to monetary claims, while precautionary measures cover non-monetary rights and claims.
Effect: Precautionary seizure does not prevent the sale of the seized assets by third parties, whereas precautionary measures prevent such transactions.
Due to these differences, precautionary seizure and precautionary measures should not be confused with each other.
