Article 89 of the Execution and Bankruptcy Law sets forth the procedure to be followed in warrant of distraint issued to third parties. The legislator has adopted this provision to be able to distraint of the debtor's goods, receivables, and other rights in third parties; with this provision, it is possible to distraint the said goods, receivables, and rights by sending warrant to the third party, and the third party is allowed to object to the warrant.

With the first warrant of distraint regulated under Article 89/1 of the Execution and Bankruptcy Law, it is aimed to announce to third parties that a receivable or other claim right of the debtor that does not belong to the bearer or is a bill which is not based on capable of endorsement, or a movable property in the possession of a third party.

Article 89/1 of the Execution and Bankruptcy Law: If a receivable or other claim right that does not belong to the bearer or is not based on an endurable deed, or a movable property of the debtor in the possession of a third party is seized, the debt enforcement officer shall notify the debtor, real or legal person, that henceforth he can only pay his debt to the enforcement office and that the payment made to the debtor-in-possession is not valid, or to the third party holding the property that henceforth he can only deliver the movable property to the enforcement office, not to give the property to the debtor-in-possession, otherwise he will have to pay the price of the property to the enforcement office.

The third party has the right to object to this warrant in writing or verbally within seven days following the notification of the attachment notice. Pursuant to Article 89, Paragraph 2 of the Execution and Bankruptcy Law, the debtor may claim that he/she (I) does not owe any debt (ii) the goods were not in the possession of the trustee (iii) the debt was paid before the notice of attachment was served (iv) the goods were consumed, i.e. used up (v) the goods were destroyed through no fault of the debtor (vi) the goods did not belong to the debtor (vii) the goods were pledged to him (viii) the receivable was given to the debtor or to the place he ordered against the warrant of distraint.

If the third party does not object within seven days following the first warrant of distraint, the debt required by the first warrant of distraint shall be deemed to be in the possession of the third party. In other words, the third party is deemed to have accepted that he/she owes the amount of the receivable requested by the first warrant of distraint to the debtor (Art. 89/III c.1).

Article 89/3 of the Execution and Bankruptcy Law: If the third person fails to object to the warrant of distraint within seven days of the date of receipt, the properties will be deemed to be in his possession and the debts will be deemed to be under his responsibility, and a second warrant of distraint will be sent to him, stating that he has not raised a timely objection to the first warrant of distraint and therefore, the properties are deemed to be in his possession and the debts are deemed to be under his responsibility. It will further be stated in this second warrant of distraint that the recipient third person may raise an objection for the reasons set forth in the second paragraph within seven days of receipt of the second warrant of distraint, or otherwise, he is requested to pay to the execution office the debts deemed to be under his responsibility or to deliver to the execution office the properties deemed to be in his possession. If the third person does not raise a timely objection to the second warrant of distraint and does not pay to the execution office the debts deemed to be under his responsibility or does not deliver to the execution office the properties deemed to be in his possession, the third person will be warned by a further notice that he should pay the debts and deliver the properties to the execution office within fifteen days or alternatively, he should apply to the court for a declaratory judgment for determination of non-existence of debt, or otherwise, legal compulsory force will be applied to force him to deliver the properties deemed to be in his possession or to pay the debts deemed to be under his responsibility, as the case may be.

This presumption that the third party who has not objected to the first warrant of distraint within seven days is deemed to have accepted that he/she owes the debtor is not a conclusive presumption. This is because the third party may file an objection even after receiving the second warrant of distraint.

The enforcement office shall send a second attachment notice to the third party who has not objected to the first warrant of distraint within seven days. With the second warrant of distraint, the third party is notified that the debt is deemed to be in his/her possession since he/she did not object to the first warrant of distraint within seven days, that he/she may object to the second warrant of distraint for the reasons specified in Article 89/2 within seven days from the second warrant of distraint to him/her, and if he/she does not object, he/she is requested to pay the debt deemed to be in his/her possession to the enforcement office.

The third party may object to the warrant within seven days following the second warrant of distraint. The objection to this objection is the same as the objection to the first warrant of distraint. If the third party does not object to the second warrant of distraint within seven days following its notification, the debt shall be deemed to be in his/her possession.1

Even if the third-party objects to the warrant of distraint notified to the debtor at the execution office within the time limit, he has the legal interest to have the warrant of distraint partially or completely cancelled by filing a complaint with the execution court, claiming that it was issued irregularly.

In order to be able to talk about a future expected receivable, it is sufficient that a legal relationship exists and the type and debtor of the receivable arising from this legal relationship are known. On the other hand, it is not possible to characterize as expected receivables those receivables that are not based on a legal relationship between the debtor and the third party (at the time the first warrant of distraint is served) and that are based solely on hope and probability.2

Footnotes

1. Kuru, B.; İcra İflas Hukuku El Kitabı, Ankara 2013, s. 471

2. Kuru, B.; İcra İflas Hukuku El Kitabı, Ankara 2013, s. 491,492

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.