Secondary Liability of Companies Participating to Spin-off
Turkish Commercial Code No. 6102 (“TCC”) contains various protections with regard to the creditors of the companies that are participating to spin-off transactions; as a part of the assets of the company, which constitutes a security for the receivables of the creditors of the company subject to spin-off, are transferred without the creditors’ consent. Thus, a capital reduction may be required in the event that the liability fund is reduced. In addition, the risk for creditors in the case of spin-off may also arise inter alia due to a change of debtor, the division of assets or the guarantee, and the fact that the legal personality of the guarantor or the surety has been revoked. The risk of potential loss of creditors may be raised, not only in the company that is subjected to a spin-off, but also in the company which takes part in the spin-off transaction as assignee, depending on the distribution of the assets that are subject to the spin-off.
In this context, the TCC stipulates obligations under Article 174 with respect to making certain announcements through the spin-off process; and Article 175, and with respect to granting collaterals and liability systems for the companies participating in spin-offs that differ from general provisions.
In addition to the above, Article 168/3 foresees joint liability in spin-offs for debts that are not allocated to any company, and Article 176 foresees secondary liability for the companies that participated in a spin-off. In this study, secondary liability of the companies that participated in a spin-off will be examined.
As explained, above, in the event of a spin-off within the scope of the TCC, the receivables and securities of the creditors of the companies participating in a spin-off transaction may be endangered for various reasons. In order to eliminate such inconveniency, a two-degreed liability system is foreseen. In this context, Article 176/1 of the TCC, contains a provision that states “In the event that a company, allocated with a debt through spin-off agreement or plan, which is primarily responsible, does not fulfill the receivables of the creditors, the companies participated to the spin-off shall be jointly liable as the secondary liable companies.”
Through such provision, the legislator, stipulates a joint liability for companies participating in a spin-off, in other words, the companies in which the assets are subjected to spin-off are distributed for the case which primarily liable company cannot fulfill the debts allocated to it. The purpose herein is to grant an additional opportunity to the creditors in case the debt in question cannot be fulfilled by the company which is primarily responsible, i.e. the company that the respective debt is allocated to. In this respect, it is not possible for the creditors to claim their receivables from secondary companies prior to claiming the same from the primarily liable company.
Additionally, the respective receivable should not be secured in order to enable the creditor to claim its receivable from the secondary liable company. Although there is no reference in such condition to Article 175 of the TCC, this condition is deemed related to collaterals granted through the spin-off process in the doctrine.
In addition to the above explained two conditions, Article 176 also requires the primarily liable company to:
- Be bankrupted;
- Be in the concordatum process;
- Be meeting the conditions issuance of a certificate regarding unattainability of the receivables in a legal procedure against it;
- Have moved its headquarters abroad and, therefore, it becomes impossible to be pursued legally in Turkey; or
- Have moved its headquarters that is already abroad and, therefore, it becomes hard to be legally pursued.
In the event that all such conditions are fulfilled, and the company that is allocated the debt to through spin-off agreement or plan does not fulfill receivables of the creditors, other companies who have participated in spin-off transactions (secondary liable companies) shall be severally liable.
It is notable that the scope of the liability is not foreseen under the Article.
As a matter of fact, in addition to the fact that the Article text does not contain any restrictions on the unfulfilled receivables, it also does not include any restriction on the scope of the liability of the secondary liable companies. If the Article is literally interpreted, it is clear that the failure of a company participating in a spin-off to fulfill any of its receivables (irrespective of whether the receivable is allocated through a spin-off) may result in the liability of the secondarily liable companies. However, taking into consideration of the purpose of the Article, it may be evaluated that the secondary liability should be raised only in terms of the debts occurred prior to spin-off. Concordantly, the preambles of the Article refer to the transferred, assigned debt while describing the liability.
On the other hand, as the scope of secondary liability is not restricted, the secondary liable companies shall be liable through all of their assets, not limited by the assets allocated to them through spin-off in the case that the primarily liable company does not fulfill the receivables in subject.
The Article contains no clarification as to whether the primarily liable company may be the company subjected to spin-off (assignor company). Nevertheless, the preambles of the Article refer to the assignee while describing the primarily liable company, and it is clear that the company that is primarily liable cannot be the assignor company.
Lastly, as the Article does not contain any limitation with respect to the term of the responsibility, the secondary liability shall be subject to the statute of limitation that the respective receivable is subject to.
Through a spin-off of a portion of the assets of the company, which constitutes security of the receivables of the creditors of the company that are subject to spin-off, these are transferred without the creditors’ consent. Additionally, depending on the distribution of the assets that are subject to the spin-off, the risk of potential loss of creditors of the company that takes part in the spin-off transaction as assignee may be raised. In this regard, the TCC stipulates certain obligations with respect to making certain announcements through the spin-off process; with respect to granting collaterals and joint liability.
Article 176 of the TCC that regulates joint liability for the companies participating in spin-offs, does not clarify the subjects described above. Therefore, the courts may accept an implementation of this Article that may go beyond the original objective maintained by the legislator.
 Pulaşlı, Hasan: Şirketler Hukuku Genel Esaslar, Ankara, 2017, p. 130.
 Pulaşlı, p.131.
 Preambles of TCC. https://www.tbmm.gov.tr/sirasayi/donem23/yil01/ss96.pdf. (Access date: 01.04.2019).
Coştan, Hülya: Bölünmeye Katılan Şirketlerin Müteselsil Sorumluluklarının Sınırlandırılması, p. 234. http://dspace.marmara.edu.tr/bitstream/handle/11424/2102/5000001563-5000000614-PB.pdf?sequence=1. (Access date: 01.04.2019).
 Çebi, Hakan: Türk Ticaret Kanunu Tasarısı’na Göre Anonim Ortaklıkların Bölünmesi, İstanbul, 2011, p. 264.
 Pulaşlı, p. 130.
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