In a simple partnership, a partner’s liquidation share is not found by multiplying the cash on hand by the partner’s percentage. First, all assets and liabilities are identified. Debts to third parties, liquidation expenses, and the partners’ documented advance and expense claims are taken into account. The profit or capital deficit remaining after capital is returned is then distributed according to the applicable sharing ratio. A correct result requires that the contract, the valuation dates and any earlier disputes be reviewed together on the same calculation.
What is the difference between a liquidation share and a capital claim?
The liquidation share is the net result a partner will receive once the accounts of the terminated partnership are closed. A partnership contribution is the money, receivable, property or labour that a partner puts into the common purpose. Having paid 600,000 TL into the partnership does not mean that 600,000 TL will certainly be received at liquidation. A loss may reduce that amount, while an advance claim and a profit share may increase the total payment. The basic framework is Articles 620–645 of the Turkish Code of Obligations (TBK).
Is every money transfer a capital contribution?
Money paid by a partner may rest on an agreed capital contribution, an advance given to the partnership, a payment made to cover expenses, or a debt relationship outside the partnership. The bank description is important but, on its own, does not resolve every dispute. The contract, partnership resolutions, accounting entries and the purpose of the payment must be considered together. Recording the same amount as both capital and an advance means that the partner is paid twice.
Under Article 627 TBK, a partner who advances money to the partnership may claim interest from the date the money was paid. However, the type, rate and period of interest, and the effect of the contract, must be determined separately. For an expense claim, it is examined whether the expense was actually incurred, whether it is connected with the partnership’s business, and whether it had not already been covered. A partner’s performance of a labour obligation they had undertaken does not, by itself, create a separate wage claim. For labour that the partner was not obliged to provide, the fair compensation under Article 627 is a different matter.
Which values and dates are used in the liquidation calculation?
How is the inventory of assets and liabilities prepared?
Assets may include cash and bank balances, receivables, stock, vehicles, machinery, real estate, deposits and receivables from partners. Liabilities include debts to suppliers, lenders, tax authorities, employees, landlords and others; accrued interest; and the expenses necessary for the liquidation. The fact that an item is registered in a partner’s name, or was not written into the partnership’s books, does not make it unnecessary to investigate its true legal ownership.
The inventory must be a working schedule in which each line is tied to a document. For each debt, the creditor, the basis, the due date, any collateral, the amount paid and the remaining balance should be tracked separately. When the sale value of a pledged asset is written down, the same loan must not be deducted both from the sale proceeds and from the list of debts. The tax consequences of the liquidation should be determined with the help of financial experts before the share is calculated.
A doubtful receivable cannot be distributed as though it were money certain to be collected simply because it appears on an invoice. Collectability, security, litigation and enforcement status are reviewed, and the reason for any reduction in value is explained. For ongoing work, not only the expected progress payment but also the cost of completing the work, deductions and potential liabilities should be considered. If these are not linked to one another, income not yet earned would be distributed.
If goodwill or a customer base is to be given a value, its economic value and transferability, and how it is reflected in a sale, should be shown. Where the sale price of the business as a whole already includes that value, goodwill cannot be added again on top of it. The assumption that every file contains goodwill is also not correct.
At what value is property contributed in ownership returned?
Under Article 642 TBK, the law does not treat the return in kind of an item whose ownership was contributed to the partnership as the default. The partner’s capital account first uses the agreed contribution value; if no such value exists, the value of the item on the date it was contributed to the partnership is determined. For example, if a machine whose contribution value was set at 400,000 TL is sold today for 700,000 TL, this does not automatically make the partner’s capital return 700,000 TL. The difference arising from the sale affects the profit or loss result within the overall calculation.
Where only the right of use of a machine was contributed, ownership has not passed to the partnership. For that reason, the full sale price of the machine cannot be presented as distributable partnership assets. The end of the use, the delivery of the item, damage and any separate claims are treated according to the contract. Whether the partners make a valid agreement to divide the item in kind is assessed separately from the statutory default of calculating in money.
The date on which the partnership ended, the inventory date, the date the item was contributed as capital, the actual sale date and the date of the final account should be shown separately. Examining the current value of the liquidation assets and determining the historical value of the capital contribution under Article 642 TBK are different tasks. The book value in accounting does not automatically replace either of these two legal values.
In what order are debts, advances, expenses and capital taken into account?
Under Article 643 TBK, what may be distributed to the partners arises only after debts, advances, expenses and capital contributions have been considered. The calculation follows this order:
- Third-party debts and the expenses needed for the liquidation are identified; unpaid or disputed obligations are clarified.
- The partners’ documented advance and expense claims are calculated, taking into account payments already made.
- It is determined whether the remaining assets cover the capital.
- The resulting profit or capital deficit is distributed at the ratios applicable to the partners.
This scheme is not a priority table that determines the order in which all creditors may enforce against one another. Pledges, public-law claims and other special priorities are subject to their own provisions. For the remuneration of the liquidator, Article 644 TBK contains a specific rule: the fee is covered from the partnership’s assets and, if that is not possible, jointly and severally by the partners.
Does a partner with a larger capital receive a larger profit?
Unless the contract provides otherwise, under Article 623 TBK profit and loss shares are equal, regardless of the amount and nature of the capital. If two partners contribute capital in the proportions 60% and 40%, this does not show that profits must also be shared in those proportions. If the contract sets only a profit ratio or only a loss ratio, the statutory rule makes that ratio apply to the other as well.
A partner who contributes only labour is also not automatically exempt from losses unless there is an agreement. An agreement may provide that this partner shares in profits but not in losses. The same exception does not apply to a partner who also contributes something beyond labour. A labour contribution cannot be converted, by calculating a notional wage, into a cash capital item to be repaid.
The sharing of losses in internal relations is not the same as liability toward a third-party creditor. Under Articles 637–638 TBK, the manner of the transaction and of representation is examined; for partnership debts undertaken jointly or through a representative, joint and several liability is generally in question. An agreement between the partners on sharing losses does not bind the creditor. Termination of the partnership does not, under Article 645 TBK, extinguish obligations toward third parties.
Liquidation share calculation in two scenarios
Example assumptions and the joint calculation
The figures below are entirely hypothetical. Ayşe contributed 600,000 TL and Burak contributed 400,000 TL in cash; no different ratio was agreed for profit and loss. Ayşe has a total advance claim of 100,000 TL, made up of 95,000 TL in principal and 5,000 TL of accrued interest that the parties accepted in the account; this interest amount is not an example of a statutory rate. Burak additionally has a documented, unpaid expense claim of 50,000 TL.
Third-party debts total 250,000 TL: 180,000 TL owed to suppliers, 30,000 TL of tax, and 40,000 TL of other debts. Liquidation expenses consist of a 20,000 TL liquidator’s fee and 30,000 TL of sale and transaction costs. The assets below are assumed to have been fully converted into cash, with no other debts, tax, interest, disputes, security or ongoing work remaining. Advance and expense claims are not included in the third-party debts.
| Account item | Gain scenario (TL) | Loss scenario (TL) |
|---|---|---|
| Cash and bank | 300,000 | 200,000 |
| Collected customer receivables | 500,000 | 400,000 |
| Inventory sale proceeds | 450,000 | 350,000 |
| Equipment sale proceeds | 350,000 | 250,000 |
| Total realised assets | 1,600,000 | 1,200,000 |
| Third-party debts | −250,000 | −250,000 |
| Liquidation expenses | −50,000 | −50,000 |
| Total payable to partners | 1,300,000 | 900,000 |
| Ayşe’s advance claim | −100,000 | −100,000 |
| Burak’s expense claim | −50,000 | −50,000 |
| Remainder for capital and result allocation | 1,150,000 | 750,000 |
| Total capital comparison amount | 1,000,000 | 1,000,000 |
| Profit / capital deficit | +150,000 | −250,000 |
The last two rows are not transactions deducted from the remainder a second time. They show the comparison of 1,150,000 or 750,000 TL with the capital of 1,000,000 TL. If the profit is 150,000 TL, each partner receives 75,000 TL more; if the loss is 250,000 TL, each partner’s share is reduced by 125,000 TL.
| Partner’s net calculation | Ayşe: profit | Burak: profit | Ayşe: loss | Burak: loss |
|---|---|---|---|---|
| Capital account (TL) | 600,000 | 400,000 | 600,000 | 400,000 |
| Profit addition / loss deduction (TL) | +75,000 | +75,000 | −125,000 | −125,000 |
| Capital and result total (TL) | 675,000 | 475,000 | 475,000 | 275,000 |
| Advance / expense claim (TL) | +100,000 | +50,000 | +100,000 | +50,000 |
| Net payment (TL) | 775,000 | 525,000 | 575,000 | 325,000 |
How is the accuracy of the calculation checked?
In the profit scenario, 775,000 + 525,000 + 250,000 + 50,000 = 1,600,000 TL. In the loss scenario, 575,000 + 325,000 + 250,000 + 50,000 = 1,200,000 TL. Thus the entire asset is closed by payments to the persons entitled to it; advance and expense repayments are already included in the partners’ net payments.
In the loss scenario, third-party debts can be paid but the capital is not fully returned. This alone is not “bankruptcy”. In a heavier loss, a loss contribution exceeding the partner’s capital account, or a separate payment obligation toward a third party, may arise. These are assessed separately with regard to the loss ratio, any valid agreement concerning a labour partner, external liability and the possibility of collection. Readers facing a similar situation may find the article The Non-Accounting Partner in a Simple Partnership useful.
Why should earlier personal withdrawals not be deducted twice?
Let us change the profit scenario: suppose that before liquidation Ayşe withdrew 100,000 TL from the joint account for personal use. The cash and bank balance falls from 300,000 TL to 200,000 TL. If this amount is accepted as a withdrawal taken from the partnership, not previously offset, and due to be returned or offset in the account, a 100,000 TL line is added to the partners’ claims. The economic calculation is still set up on the 1,600,000 TL total; the actual cash on hand is 1,500,000 TL.
Ayşe’s total entitlement of 775,000 TL is reduced once, by the withdrawal, and she now receives 675,000 TL. Burak receives 525,000 TL. Current payments to partners total 1,200,000 TL; third-party debts and liquidation expenses total 300,000 TL. Together they close the 1,500,000 TL actually on hand. Ayşe’s earlier 100,000 TL withdrawal should also be kept in mind.
It is wrong both to reduce the profit by treating the withdrawal as a partnership expense and to deduct it again from Ayşe’s share. By contrast, a previously finalised profit distribution, a return of capital or an actual expense payment cannot arbitrarily be reversed by the same method. The legal nature of each transaction, and the account to which it was previously posted, must be shown.
How is the liquidation share determined by the court in a dispute?
Article 644 TBK regulates liquidation as a process carried out with the participation of all partners. The partners may appoint a liquidator; if they cannot agree, each partner may ask a judge to make the appointment. Disputes over the liquidation procedure and the share to be distributed are also resolved by the court. Determining the value of a single machine and awarding half of it alone may not be sufficient in a file where the entire partnership account must be closed.
In the decision of the Civil General Assembly of the Court of Cassation (Yargıtay Hukuk Genel Kurulu) dated July 8, 2020, E. 2017/3-1768, K. 2020/541, a livestock partnership between brothers was examined. According to the full text published by Karamercan Hukuk, the Court accepted that all assets and liabilities of the partnership must be listed, balance sheet objections evaluated, property converted into money, and the judgment set according to the final balance sheet. For the livestock partnership, the decision of persistence (direnme kararı) was quashed; separate objections concerning a tractor and interest were dismissed for lack of legal interest. The decision matters because it shows that a calculation must not be made by selecting only the items one prefers.
The three stages in the decision are the inventory, the conversion into money, and the final account and distribution. The quarterly periods mentioned in the text are a working arrangement that may vary according to the dispute; they are not a statutory fixed period stating that liquidation must end in nine months. Where the liquidation date has not been set, adopting a valuation close to the date of the decision does not remove the capital valuation rule in Article 642 TBK.
Oğuz Yolal’s 2026 review notes that the role of the court in liquidation is debated in legal scholarship, and it stresses the separation between technical liquidation work and judicial supervision. This distinction matters in practice: the liquidator’s account and an expert’s technical review do not take over legal characterisation or the power to decide. The doctrinal debate does not reduce the need to examine the parties’ objections to accounts and documents. For a broader framework, the article Protecting Assets in the Liquidation of a Simple Partnership may be read.
How are the court, the parties and mediation determined?
A simple partnership has no legal personality, so an action should not be brought by naming only the partnership as defendant. The parties to the liquidation relationship, their status as partners, representation and, where necessary, heirship must be investigated, and joinder must be established so that all partners take part in the proceedings. The fact that a person only manages or handles the accounting does not prove that the person is a partner.
The general court with jurisdiction is the civil court of first instance. However, where the conditions of commercial matters under Articles 4–5 of the Turkish Commercial Code (TTK) are met, the commercial court of first instance is competent. The commercial nature of the business and the status of the parties should be examined in the file. The label “simple partnership” alone does not settle the question of jurisdiction.
For a claim for a commercial monetary receivable, mandatory mediation as a condition precedent to suit is assessed under Article 5/A TTK. A request for dissolution or liquidation, and a monetary claim raised alongside it, should not be treated as the same thing. Liquidation of the partnership should not be equated with an action for dissolution of co-ownership in shares (paylı mülkiyetin giderilmesi, izale-i şuyu) merely because of the word “partnership” in its name; the outcome sought and the legal relationship are decisive.
Which points matter for limitation and objections to the report?
For claims arising from the partnership agreement, the five-year limitation period under Article 147/4 TBK applies. The starting point is the due date (muacceliyet) under Article 149 TBK. The day the capital was paid in, the day the relationship effectively ended and the day the liquidation claim became enforceable are not the same in every case. A single starting date cannot be given to all claims without examining the final account agreement, the manner in which the liquidation was carried out, and the independent nature of any advance or expense claim. Grounds of interruption, such as acknowledgment of the debt and the filing of an action, are also checked.
If the amount cannot be fully determined when the action is filed, earlier explanations in an action for an indeterminate claim should not be relied upon. Law No. 7589 repealed Article 107 of the Code of Civil Procedure (HMK). Through Article 109/4 it introduced a one-time increase of the claim in a partial action until the end of the investigation, and provided that limitation for the increased part is interrupted as of the filing date. There is a transitional provision for actions under former Article 107 opened before the repeal. The claim and fee plan should be set by reference to the filing date.
An objection to an expert report must be made within two weeks of its notification under Article 281 of the HMK. Where the conditions added by Article 24 of Law No. 7251 are present, an additional period of at most two weeks may be granted, once only, if requested within the time limit. This possibility is not automatic.
In an objection, it is not enough merely to reject the amount of the result. The missing assets, wrong valuation date, incorrect distribution ratio, unsupported expenses and double offsetting should be identified. The court deadlines for the liquidator’s balance sheet and the deadline for objecting to the expert report should not be confused. Matching the contract, bank records, inventory, invoices, progress payments and partner account movements against the same dates makes the review concrete.
Information and documents sent to Gunes & Gunes Law Firm are handled only for legal evaluation and within the scope of the engagement undertaken, observing professional secrecy and KVKK obligations. For sensitive documents, the secure sharing channel should be requested from the firm. A first contact does not mean that a matter or representation has been accepted; the scope of the service is determined separately.
To classify payments, the article Return of Capital in a Simple Partnership is relevant, and where accounts have been agreed, the liquidation settlement protocol review completes this calculation. For the general stages, the main guide Liquidation of a Simple Partnership and Legal Processes may also be consulted.
Related article: Withdrawal from a Simple Partnership and Expulsion of a Partner: Rights While the Partnership Continues. The details of this stage are also covered in the article titled Objection to an Expert Report.
Conclusion
The correct liquidation share in a simple partnership arises from a complete inventory combined with the correct legal classification. Capital, advances, expenses and earlier withdrawals must be tracked separately, and the contribution value must not be confused with the current liquidation value. Each partner’s net account must close against the partnership’s total assets. A single “partnership ratio” given without clarifying the contract and payment documents does not produce a reliable account. In a dispute, the claim, the parties and the procedural time limits are as decisive as the calculation itself.
Frequently Asked Questions
Can I recover the entire capital I put into a simple partnership?
This depends on the assets remaining at liquidation. If capital cannot be covered after debts, expenses and advances, the loss is shared. Full return of capital cannot be guaranteed merely by looking at the initial payment document.
Does a partner who contributed 70% of the capital receive 70% of the profit?
As a rule, no. Unless the contract agrees on a different profit and loss ratio, the shares are equal. It must also be examined whether the document showing the capital ratio also contains a profit-sharing agreement.
Does a partner who contributes only labour share in losses?
Yes, unless a different agreement exists. A partner who contributes only labour may agree to share in profits without sharing in losses. The effect of that internal agreement on third-party creditors is a separate matter.
Can I take back a machine I gave to the partnership?
What matters is whether you left the ownership of the machine to the partnership or only its use. In a contribution of ownership, the calculation is based on the contribution value under Article 642 TBK; in a contribution of use, the machine is not treated as goods the partnership may sell. The conditions of a valid sharing agreement are also assessed separately.
Are all debts extinguished once the liquidation share is calculated?
No. A debt that was left out is not extinguished merely because the partners have shared the balance among themselves. Article 645 TBK provides that obligations toward third parties continue. For this reason, distributing all the money before known debts and risks are settled may lead to later claims.
Sources and legal bases
- Law No. 6098 on the Turkish Code of Obligations, in particular Articles 147/4, 149, 154, 620–623, 627, 637–645. Text of the Ministry of Labour and Social Security (Çalışma ve Sosyal Güvenlik Bakanlığı).
- Law No. 6102 on the Turkish Commercial Code (Türk Ticaret Kanunu), Articles 4, 5 and 5/A. Text of the Ministry of Trade (Ticaret Bakanlığı).
- Law No. 6100 on Civil Procedure (Hukuk Muhakemeleri Kanunu), Articles 281–282. Text of the Ministry of Justice (Adalet Bakanlığı); for the additional-period provision, Law No. 7251, Article 24.
- Law No. 7589 Amending Certain Laws on the Efficient and Effective Functioning of the Judiciary (Yargının Etkin ve Verimli İşlemesine Yönelik Bazı Kanunlarda Değişiklik Yapılmasına Dair Kanun), Articles 19–20, provisional Article 1/10, Article 26. TBMM text.
- Civil General Assembly of the Court of Cassation (Yargıtay Hukuk Genel Kurulu), July 8, 2020, E. 2017/3-1768, K. 2020/541, particularly paras. 43–47 and the conclusion. Full text of the decision published by Karamercan Hukuk.
- Yolal, Oğuz, “Carrying Out the Liquidation of a Simple Partnership Through the Court in Light of Court of Cassation Decisions” (Yargıtay Kararları Çerçevesinde Adi Ortaklığın Tasfiyesinin Mahkeme Aracılığıyla Yapılması), Hacettepe Law Faculty Journal (Hacettepe Hukuk Fakültesi Dergisi), 16(3), 2026, pp. 770–819, DOI: 10.32957/hacettepehdf.1819906. Full text.