Seizure of the Borrower’s Money in the Bank

As a rule, it is possible to seize all kinds of property and rights of the debtor. Some goods and rights that are stipulated in the Law cannot be confiscated as exceptions and these are clearly stated. It is possible to seize all assets of the debtor, such as movable and immovable properties and the right to claim. However, the seizure procedure of these goods and rights are different from each other. For example, while the debtor’s movable and immovable properties are seized where they are, it is sufficient to send a lien letter to the registry where they are registered by the enforcement office and annotate the registry. The seizure of the debtor’s right to claim from third parties is also subject to a special procedure in the Enforcement and Bankruptcy Law. The debtor’s receivables from third parties includes the debtor’s salary or wages from the employer, money in a bank, money loaned to a person, profit or liquidation share in a company, receivables from the sale price of the goods sold, and others. The seizure of such receivables of the debtor from third parties is divided into two groups;

• Seizure of the debtor’s salary or wages in third parties,
• Seizure of debtor’s receivables from third parties,

These two types of seizures are regulated in different articles in the Law, and if the debtor’s right to claim on the third party has a nature of salary or wage garnishment, this situation is regulated in EBL articles 355-356. The debtor’s receivables other than salaries or wages are seized in accordance with the procedure stipulated h in article 89 of the EBL. Since this method, which is called “89 seizure” in practice, is mostly used for the seizure of the debtor’s bank deposit, the application of EBL article 89 will be discussed in this bulletin over the seizure of the debtor’s right to claim in the bank.

1. How is the Borrower’s Receivable in the Bank Seizured?

In order to seize the debtor’s right to claim in the bank, a lien must be requested by the creditor. However, it is very difficult for a creditor to know in which bank and in what amount the debtor has recieveables. This type of information is not shared with anyone, as it falls under banking secrecy. In this case, two possibilities may arise;

• The debtor shall declare his/her money in the bank while declaring his/her property,
• The creditor shall claim that debtor has money in the bank, although the debtor him/herself does not declare his/her assets or does not mention the money in the bank.

As in the first case, if the borrower declares that he/she has money in the bank, the deposit in the bank is easily seized. In the second case, at the request of the creditor, the debtor’s bank deposit is seized; but in the meantime, it is not yet known whether the debtor actually has a receivable (money) in that bank. The real situation will be seen following the lien notice sent to the bank by the executive director.

Since the method of confiscation of the debtor’s money in the bank at the request of the creditor is based only on the claim of the creditor, the legislator has envisaged a special procedure here to grant the right of objection and defense to the third party. In this method, up to three lien notices are sent to the bank for the lien of the debtor’s money. By allowing the bank to object or file a lawsuit against each lien notice, it has been tried to ensure that the bank does not have to pay a money that it does not actually owe, just on a simple claim of the creditor. However, if the bank has objected to one of these notices, new lien notices will no longer be sent to the bank, and the bank will get relief from paying the debt. Detailed information about this process is given below.

1.1. Sending the First Lien Notice to the Bank

According to the Supreme Court; “Deposit receivables of the debtor in a third party bank are considered securities as per article 106/2 of the EBL. Deposits in the bank can be confiscated by a letter to be written to the bank by the executive directorate, such as movable lien (HGK’s decision dated 1.12.1999 and numbered 1999/12-1003/1017), as well as with a lien notice issued in accordance with Article 89 of the EBL. In this case, the legal consequences written in the following articles of the İİK will arise If a lien letter that does not meet the conditions in article 89 of the EBL is sent, the legal results specified in the aforementioned article will not arise and the debt will not be counted as debit of the bank.”[1]

Upon the request of the creditor, a first lien notice is sent to the general directorate of the bank, which is the third person in the execution proceedings, in order to seize the money in the bank account of the debtor in this bank.  By this notice, the executive director informs that the money in the bank belonging to the main debtor of the proceeding has been seized. In the notice, the bank is warned that it should only pay the deposit debt to the debtor only to the enforcement office. By the notice, the bank is admonished that if there is any money as claimed by the creditor, it must pay it to the enforcement office within 7 days, and if the bank thinks that there is no such debt, it must object within 7 days.

If the bank accepts the existence of such a receivable and makes a payment to the enforcement office, the second lien notice will no longer be sent to the bank. Even if the bank makes an objection in due time, no lien notice can be sent to it again. If the bank does not both pay and object, the bank will be warned that the debt will be deemed debit of the bank and the bank will eventually have to pay this debt. In addition, a second lien notice is sent to the bank.

1.2. The Second Lien Notice

If the bank does not object to the first notice within 7 days, the second lien notice is served on it. In this notice, the bank is warned about that the debt is accepted as debit of the bank since no objection was made to the first notice, that it can pay this debt at the enforcement office within 7 days or that it can object to this notice within 7 days. If the bank makes the payment in due time or an objection is made, a third lien notice cannot be sent to the bank. If neither the payment nor the objection is made within the period, the fact that the debt is entrusted by the bank becomes final and the third lien notice is sent.

1.3. The Third Lien Notice

A third lien notice is sent to the debtor who does not object to these notices in due time, despite being sent two notices before. In this notice, it is admonished that the fact that the debt is deemed to be entrusted by the bank has become final, therefore this debt must be paid within 15 days or if it is thought that there is no such debt yet, a negative declaratory action must be filed within the same 15-day period.

If the bank files a negative declaratory action within 15 days and informs the enforcement office that it has filed this lawsuit within 20 days, as of the notification of the third attachment notice, the proceedings against the bank stop. The burden of proof in this case is on the bank. If the bank wins the case by proving that there is no such debt, the proceedings against the bank can no longer be continued. If the creditor, not the bank, wins the lawsuit, the bank is convicted to an execution indemnity of not less than 20% of the debt due to the untrue objection to the notices, and the execution proceeding continues.

In the event that the bank does not file any lawsuits, the debt must be paid to the enforcement office. In this case, the creditor’s right to claim is paid by the enforcement office by seizing the goods (money) of the bank that does not pay within 15 days, sufficient to meet the creditor’s receivables.

“In the article 89/3 of the EBL, the following provision is stipulated: “If the third party does not object within seven days from the notification of the lien notice to him, the property is deemed to be in the trusteeship or the debit, and it is reported with a second notice that the third party did not object to the lien notice sent to him in due time, and therefore the goods are counted as seventh of the lien or debit. In this second notice, the third party is also requested to make an objection for the reasons specified in the second paragraph within seven days from the notification of the notice, or to pay the debt deemed in the debit to the enforcement office if the third party does not object, or to deliver the goods that is assumed to be in trusteeship to the enforcement office.
In the concrete case, when the proceeding file, which is the subject of the case, has been examined, it has been seen that the first lien notice was sent to the complainant in accordance with the 89/1 article of the EBL. With the petition dated 04.10.2019, the complainant stated that the debtor …. Corporate Services A.Ş. had a pending receivable of 346,458.58 TL as of 03.10.2019, while the other debtor ….. had no receivables, and then the second lien notification was sent, this time, by the petition dated 21.10.2019, the complainant objected to the second lien notice in terms of both debtors on behalf of the entire organization, including their businesses, and the third lien notice was sent despite the objection.

In that case, it is not possible to send the third lien notice since the second lien notice was clearly objected to in due time; the decision of the first-instance court regarding the annulment of the third attachment notice was appropriate, and while the Regional Court  should have decided to dismiss the creditor’s appeal on the merits, the decision in writing was inaccurate and was reversed. [2]

1.4. The Nature of the Objection

 

The bank can make different types of objections such as that there is no such debt or it has been paid to the debtor before, the money in the deposit is not in the amount claimed by the creditor, the bank is also owed from the debtor of the proceeding, and a pledge has been established on the deposit. In addition, it is possible for the bank to raise objections and pleas arising from its relationship with the debtor, against the debtor of the proceedings. The decision of the Supreme Court which deals with a different issue related to the establishment of a possessory lien on the deposit, is shared below;

The claim of the third party bank that it has the right of pledge on the deposit account belonging to the debtor, against the lien notice sent pursuant to Article 89 of the EBL, is in the nature of an objection, and In accordance with Article 89/4 of the EBL, the creditor can prove the opposite of the third party’s response in the enforcement court and may request that the third party be punished in accordance with the provision of Article 338/1 of the EBL, and also be convicted to indemnity. (General Assembly of Civil Chambers’ decision dated 28.3.2012 and numbered 2011/12-849-242).

The third party’s claim that he has the possessory lien on the deposit account against the lien warrant is in the nature of a replevin claim pursuant to article 96/1 of the EBL, and the executive director must act in accordance with the rules written in article 99 of the EBL. The Article 99 of the EBL says that; “If the seized good is not in the hands of the debtor (art. 96) but is in the care of the third party claiming ownership or pledge (art. 23) on it, the executive director gives the creditor seven days to apply to the enforcement court against that person. If a lawsuit is not filed with the executive judge within this period, the claim of the third party shall be deemed to have been accepted.”

In the concrete case, it was determined that the enforcement office sent the first lien notice for the attachment of the debtor’s deposit in the bank. The third-party bank’s claim that it has the possessory lien on the deposit against the lien notice is in the nature of an objection, and it is against the procedure and the law to request the money from the bank by the enforcement office.

In that case, while the enforcement court should have decided to accept the complaint, considering that the bank’s response is in the nature of an objection and the creditor must prove the opposite of the third party’s response in the enforcement court, pursuant to article 89/4 of the EBL, the decision to dismiss the complaint is inaccurate.[3]

2.    Negative Declaratory Action and Consequences

This lawsuit is filed by the bank against the creditor of the proceeding. In this case, the bank tries to prove that the creditor did not have a debit as claimed. The case is heard in the general courts according to the general provisions. The executive court is not competent in this case. Depending on the subject of the case, the civil court of first instance or the commercial court of first instance may be the competent court. The competent court is the court of the region where the enforcement proceeding is made or the court of the settlement of the bank.

If this lawsuit is filed within 15 days from the notification and notified to the enforcement office within 20 days, the enforcement proceedings will be suspended without the need to pay any security.

In the case, the real situation is revealed by having an expert examination on the commercial books of the bank. Apart from this, it is possible for the creditor to prove with all kinds of evidence.

If the bank has to pay a money that it does not actually owe in this process, it can file a lawsuit against the debtor according to the provisions of unjust enrichment. Again, if the creditor has initiated such a proceeding against the bank with gross negligence or malicious intent, the bank may file areplevin (recovery) case against the creditor of the proceeding.

3.    Claim of Penalty and Damages of the Creditor in Case of Unjust Objection by the Bank

The bank may have declared that it does not have any debt by objecting to the lien notices, even though it has the money belonging to the debtor of the proceeding. In this case, the creditor may file a lawsuit in the enforcement court against the bank that has unjustly objected and stopped the enforcement proceedings. The subject of the lawsuit may be a penalty and/or compensation (EİK article 89/4).

The enforcement court hears this case, in which the bank is primarily punished for making a false statement, as an enforcement criminal court. The criminal case must be filed within 3 months after the creditor learns that the bank has objected to the second lien notice (EBL art.347), and the compensation case can be filed within the 2 and 10 year general tort statute of limitations period.

“It is seen that the claimant made by the creditor against the lien notice sent in accordance with Article 89/1 of the EBL by the third-party defendant on the grounds that it is untrue, and compensation is demanded pursuant to Article 89/4 of the EBL, and the court has decided to dismiss the request.

Article 89/4 of EBL regulates that ‘If the third party objects to the lien notice in due time, the creditor may prove the opposite of the answer given by the third party in the enforcement court and request that the third party be penalized in accordance with the provision of paragraph 1 of Article 338 and also be convicted to compensation. The enforcement court will settle the case regarding compensation in accordance with the general provisions. The subject of the compensation under the law is the damage suffered by the prosecution creditor due to the false declaration of the third party against the lien notice. In this case, the plaintiff, that is creditor of the proceeding, must prove that the third party has made a false statement. The contrary of the third party’s statement can be proved with all kinds of evidence, regardless of the documents listed in article 68 of the EBL. Pursuant to the explicit provision of the aforementioned article; the execution court should hear and conclude the case in accordance with the general provisions.”[4]

In this case, the burden of proving the bank’s false statement is on the plaintiff creditor. The situation can be proved by making an expert examination on the bank records. Below is the current Supreme Court decision on the subject;

“In the application to the enforcement court, the creditor’s attorney claimed that the defendant’s objection to the 89/1 lien notice was unfair and demanded that the defendant be convicted to compensation equal to the amount of the debt subject to the first lien notice and the interest accrued.
It is understood that the court decided to dismiss the case on the grounds that the partner of the company cannot be accepted as a third party in terms of the following on the company and notice cannot be issued, and in case of objection to the notice, it cannot be said that a typical debtor has receivable from the third party, it is not considered possible to demand this record receivable, which will be obtained as a result of the liquidation- which the debtor company is not actually able to demand -within the scope of Article 88 of the İİK.

Article 124 of the TCC numbered 6102 decrees that limited liability companies are capital companies; Article 125 of the same law decrees that commercial companies have legal personality and can benefit from all rights within the framework of article 48 of the Turkish Civil Code; In Article 128 of the same Law, it is stipulated that each partner is indebted to the company due to the capital they have committed to invest in the company contract duly drawn up and signed.
As a rule, all kinds of property and rights of the debtor can be seized. It is obligatory to have a explicit provision in the Execution and Bankruptcy Law or special laws for non-seizability. In other words, to accept the fact that a property or right cannot be seized, there must be an explicit legal provision in this regard or a legal regulation that prevents the sale and transfer of that property or right in terms of substantive law. The partner of the company has a separate personality from the legal entity of the company, of which he/she is a partner, and is considered a third person according to the company, since he/she is a real person in the sense of Turkish Civil Code. In accordance with the above-mentioned articles of the TCC, the capital recievable can be seized because the shareholders of the company are indebted to the company due to the capital they have committed to put by the company contract and the debtor company does not have a legal regulation preventing the seizure of the capital receivable from the partner of the company. Moreover, it is undoubted that the debtor company may have other claims which arise entirely from private law and are convertible into money apart from the capital debt, and can be seized within the scope of Article 89 of the EBL, before the third party company partner

In line with the General Assembly of Civil Chambers’s jurisprudence dated 11.05.2016 and numbered 2014/12-1078 and in the face of the facts explained above; Since the partner of the company will be considered a third party in terms of the debtor company, sending the 89/1, 89/2 and 89/3 lien notice to the company partner is legal and the court’s justification is inaccurate in this respect.

In the claim for damages filed based on Article 89/4 of the EBL, by making an expert examination of the evidence, commercial books and records to be submitted by the parties, whether the debtor has a receivable that can be demanded from a third party, as of the date of notification is determined within the framework of general provisions, in other words, in order for recovery of damage to be awarded according to the aforementioned article, it is obligatory for the debtor to have a due and payable receivable that is finalized in the eye of the third party as of the notification of the lien notice to the third party and which can be seized within the scope of Article 89/1 of the EBL.
In the concrete case, in the expert report dated 05/12/2013 within the scope of the file; It has been stated that the third-party defendant owes the debtor company 783,514.54 TL according to the corporate books of the debtor company in 2011, however, despite the fact that the account receivable from the partners was declared as 777,767,74 TL in the corporate tax return of 2011, it was determined that the accounts receivable from the partners were closed by transferring the balances visible on the partners of the company to the current account of a company named ….LTD Şti, due to the fact that the legal books of 2012 were not submitted, no determination could be made as of 29/05/2012, the date of the lawsuit.

In order to determine whether the third party ….., the principal debtor .., has a specified, due and payable debt as of 22/05/2012, the notification date of the lien notice, it is inaccurate to make a written decision based on the insufficient expert report instead of determining and appraising the legal situation according to the result achieved by an expert examination of the books and documents that make up the 2012 book records of the debtor company and determining whether the debtor has a specified, due and payable receivable from a third party as of the notification date of the 89/1 lien notice.[5]

4.    Payment of the Seized Money to the Creditor

In practice, there are problems with the payment of the seized money to the creditor. Banks are waiting for a warrant or an invitation to be sent to the creditor to make the payment. Although there is no legal need to wait for such a writ, this attitude of the banks is in the nature of avoiding the fulfillment of the right.  The following Supreme Court decision reveals a very clear stance on this issue;

“In the application of the creditor to the enforcement court, it was seen that the G… Bank … Branch, third-party to whom the lien notice is sent, Demanded the annulation of the commission of the officer on the grounds that the request for payment of the money sent to the lien file must be notified to the debtor with the 103 invitation letter, first of all in accordance with the decision of the enforcement office dated 26.10.2015, and the Court rejected this complaint.

Pursuant to Article 102 of the EBL, if the lien report regarding the seizure in fact of personal property on the premises is drawn up in the absence of the debtor, a notification must be issued to the debtor in order to notify what he/she will say pursuant to Article 103 of the same Law.

In the concrete case, in accordance with the 89/1  lien notice sent to the third party Garanti Bank … Branch upon the request of the creditor, there is no need to notify the debtor of 103 invitation letter to pay the money deposited in the file by the third party to the creditor.”[6]

Conclusion

The seizure of the money in the bank of the debtor is carried out in accordance with the special procedure stipulated in article 89 of the EBL. The procedure envisaged in the law proceeds in the form of a series of certain steps limited to periods. Acting on time and with the right moves determines whether the proceeding will result for or against the person. Considering that there are possible negative declaratory actions and actions for penalty and damages within the scope of the proceeding, one can say that this type of attachment is the most technical and complex type of attachment in the Execution and Bankruptcy Law.

You can contact the Solmaz Law and Consultancy team about your other legal questions and problems on the subject.

Best Regards.

References

KURU, Baki, (2016), İcra ve İflâs Hukuku, Legal Yayıncılık, p.173-178.

12nd Civil Chamber of the Supreme Court, 2016/8204 E., 2016/26109 K.

12nd Civil Chamber of the Supreme Court, 2021/1878 E., 2021/6276 K.

12nd Civil Chamber of the Supreme Court, 2016/8204 E., 2016/26109 K.

12nd Civil Chamber of the Supreme Court, 2016/7120 E., 2016/15450 K.

12nd Civil Chamber of the Supreme Court, 2021/2201 E., 2021/7052 K.

12nd Civil Chamber of the Supreme Court, 2018/3587 E., 2018/8121 K.

[1] 12nd Civil Chamber of the Supreme Court, 2016/8204 E., 2016/26109 K.

[2] 12nd Civil Chamber of the Supreme Court, 2021/1878 E., 2021/6276 K.

[3]12nd Civil Chamber of the Supreme Court, 2016/8204 E., 2016/26109 K.

[4] 12nd Civil Chamber of the Supreme Court, 2016/7120 E.,  2016/15450 K.

[5] 12nd Civil Chamber of the Supreme Court, 2021/2201 E., 2021/7052 K.

[6] 12nd Civil Chamber of the Supreme Court, 2018/3587 E., 2018/8121 K.