A liquidation agreement for a simple partnership (adi ortaklık) should set out the partnership's accounts, who pays how much, which assets are transferred, and on what terms the partners release each other. A sound text rests on account schedules and links payment, security and the closing of pending files in a coherent order. An agreement between partners does not by itself remove the claims of third parties. A notarial signature also does not make every protocol directly enforceable.
Before the protocol: how should the liquidation account be prepared?
The parties to the protocol should not be limited to the partnership's name; the authority of all partners and their representatives must be specified. The reason for termination, the account cut-off date and who will complete ongoing work must be stated. Under article 644 of the Turkish Code of Obligations (TBK), liquidation as a rule is carried out with the participation of all partners, and a liquidator may be appointed. A table prepared by a managing partner alone is not the same as the final account accepted by the other partners. [S1] The article Partner Who Does Not Render Accounts in a Simple Partnership also examines this issue from a different angle.
What should the account and inventory schedules contain?
- Bank balances, cash, stock, fixtures and the ownership or use status of every asset.
- Collected income, receivables not yet collected, doubtful receivables and work in progress.
- Debts to third parties, debts to employees and to public authorities, suretyships, letters of guarantee and litigation risks.
- Each partner's capital contribution, advances, expenses paid for the partnership and personal withdrawals.
- Valuation date, method, supporting invoices, bank transactions and the items under dispute.
Capital, advances, expenses and profit share are not the same item. Under articles 642–643 of the TBK, debts and refunds to partners are calculated separately, and the remaining gain or loss is shared. Return in kind of property whose ownership was contributed as a share is not automatic. Property whose use was left to the partnership is assessed differently. The accounting entry must be compared with the actual payment and its legal nature. [S1]
For illustration, assume that converted assets total 3 million Turkish lira (TL), external debts 900,000 TL, documented advance and expense refunds 300,000 TL and total capital refunds 1 million TL. This leaves 800,000 TL of distributable difference. With two partners and equal profit sharing, half of that, 400,000 TL, falls to each partner. The example assumes that no separate taxes or liquidation costs exist; writing half of the 3 million TL directly to one partner is not the same calculation.
Where the parties cannot agree on the account but agree on a sum, the text must state whether the sum is the final liquidation result or a settlement amount for disputed accounts. If there is a receivable still to be collected or a tax review not yet concluded, it must be shown clearly that these fall outside the final account and how they will be shared later. In this connection, Return of Capital in a Simple Partnership should also be considered.
How should the payment debt and instalments be written?
The debtor, the creditor, the total principal, the amount of each instalment and a firm due date must be specified. Expressions such as "payment as and when possible" make the time of collection uncertain. The creditor's bank account, IBAN, payment reference and the notification method if the account changes should be included. Against fraudulent notices of account change, it is useful to confirm the change through a channel determined in advance.
Giving a bank instruction must be distinguished from the money reaching the creditor's account. The moment at which payment is deemed complete, bank charges and the item to which partial payments are credited must be clarified. Delivery of a promissory note must not be presented as cash collection unless expressly agreed otherwise.
Does an acknowledgment of debt amount to novation?
A debt acknowledgment can make the payment obligation clearer. However, under article 133 of the TBK, extinguishing an old debt by a new one, that is novation, requires clear intent. Issuing a new note or providing a guarantee is not novation by itself. The text should state whether earlier receivables and security are preserved, or whether a new settlement debt is to replace specific debts. Earlier security must not be assumed to continue automatically within the same scope. [S1]
How should currency, interest and default be regulated?
Once a foreign-currency arrangement has been confirmed as permitted, the currency, whether payment is made in that currency or as a Turkish lira equivalent, and the source of the exchange rate must be stated. Article 99 of the TBK is the basis of this distinction. The start of default interest, the type and rate of interest and its legal limits, and whether the remaining debt becomes due if one instalment is missed, must also be determined. [S1]
Applying an old statutory rate to all periods is not correct. Article 10 of Law No. 7589 changed the calculation basis under article 1 of Law No. 3095. Distinctions between commercial transactions, foreign-currency debts and contractual interest also affect the result. When choosing a rate or calculation method for the protocol, the period to which it applies must be the basis. The phrase "all loss of value is compensated" does not replace a specific obligation with a defined scope and method of calculation. [S2]
Can debts to third parties be shared between partners?
They can be shared in the internal relationship, but the creditor's rights do not change automatically through this agreement. For partnership debts under article 638 of the TBK, joint and several liability applies unless otherwise agreed. Article 645 of the TBK provides that the end of the partnership does not change obligations towards third parties. A clause stating that "all bank debts belong to the other partner" does not by itself end the liability of a partner whom the bank has not released. [S1]
Internal assumption under article 195 of the TBK must be distinguished from external assumption under article 196. For the debtor to be freed from the debt towards the creditor, the conditions of external assumption and the creditor's acceptance are required. Having the creditor party to the protocol, or obtaining a suitable separate acceptance document, reduces the scope dispute. When the debtor changes, the continuation of a third party's pledge and suretyship depends on the written consent of the relevant security provider under article 198 of the TBK. Public debts and employee claims are examined under special liability rules. [S1]
Where the partner who undertook to pay does not pay and the other partner must pay the creditor, a recourse claim (rücu) arises in the internal relationship. Notice, joinder in the defence, submission of payment evidence, the repayment date and the sharing of costs should therefore be set out. Instead of a general release for unknown debts, the period in which the debt arose, the partner responsible for the transaction and the sharing criterion may be used.
Which security can secure a liquidation claim?
A mortgage or pledge must actually be established
"Real estate is security" does not create a mortgage. Under article 856 of the Turkish Civil Code (TMK), the rule for a mortgage over immovable property is official form and registration in the land registry, without prejudice to special statutory routes. The owner of the property, the current land registry entry, the ranking of existing mortgages, attachments, the upper limit and the scope of the security must be examined. Priority cannot be inferred from the date of the protocol alone. A property of high market value may not produce the expected recovery because of prior encumbrances and sale costs. [S3]
A movable pledge also requires a formation act suited to the nature of the property. The debt and the amount the security covers, the conditions for additional security if value declines, and the conditions for release and deletion (terkin) must be set out. Releasing all security before the final instalment is received may leave the creditor unprotected for the remaining debt.
A signature on a guarantee is not sufficient on its own
Article 583 of the TBK requires, in addition to writing, the maximum amount, the date of the suretyship and, where it is a joint and several suretyship, the surety's own handwritten statement of that capacity. The spousal consent rule in article 584 of the TBK and its exceptions must be examined for the specific person; the label "commercial transaction" does not place every suretyship outside the exception. Personal security given by natural persons under other names, falling within article 603 of the TBK, is also subject to the protective rules on form, capacity and spousal consent. Therefore, writing "guarantor" does not mean that the formal requirements have been met. The special bill-of-exchange regime for aval is assessed separately. [S1, S4]
Promissory notes and aval must be examined separately
For a promissory note (bono), the elements under articles 776–778 of the Turkish Commercial Code (TTK) must be preserved. When the identity details of the note and the debt for which it was given are explained in the protocol, the effect of any condition written on the note on its character as a negotiable instrument must be assessed. An aval is a separate bill-of-exchange guarantee on a note or allonge; the person in whose favour it is given and the place of the signature matter. The structure under articles 700–702 of the TTK is not the same as ordinary suretyship. The amount collected must be deducted both from the note and from the protocol debt, and the return of the paid notes must be arranged. [S4]
At what stage should the release and pending lawsuits be concluded?
The release (ibra) under article 132 of the TBK is an agreement that can extinguish a debt wholly or partly. Stating "the parties have no rights or claims left" when no collection has yet taken place may conflict with the payment obligation. The periods and items covered by the release, the moment it takes effect and the reserved claims must be clearly written. If a conditional release is envisaged, the payment and delivery documents that will show fulfilment of the condition must be specified. [S1]
Withdrawal of an action, acceptance of a claim, court settlement and release are different acts. Withdrawal and acceptance under articles 307–312 of Law No. 6100 on Civil Procedure (HMK) are unconditional and produce effects equivalent to a final judgment (res judicata). A statement to the court such as "I withdraw if it is paid" does not produce the same result as a conditional settlement. A settlement may be made conditional under articles 313–315 of the HMK. The file number, the claims, litigation costs and the attorney's fee must be agreed separately. The attorney's powers to settle, release, accept and withdraw must be checked under article 74 of the HMK. [S5]
Can the protocol be enforced directly?
A simple written protocol does not gain enforceable character merely because the parties declare it to be "of the nature of an enforceable instrument". The way the document is drawn up and the clarity of the performance obligations both matter.
| Document route | Key distinction |
|---|---|
| Notarial instrument | A notarial deed under article 38 of the Enforcement and Bankruptcy Law No. 2004 (İİK), containing an unconditional acknowledgment of a monetary debt, is required; a mere certification of a signature is not the same. |
| Mediation agreement | The signature or endorsement requirements under article 18 of Law No. 6325 on Mediation in Civil Disputes (HUAK) apply; special mandatory endorsement provisions remain reserved. |
| Court settlement | Assessed under articles 313–315 of the Civil Procedure Code and article 38 of the Enforcement and Bankruptcy Law. |
| Attorneys' conciliation minutes | Minutes under article 35/A of the Attorneyship Law (Avukatlık Kanunu) which, signed by the parties and both attorneys under the statutory conditions before an action is brought or before the hearing begins, have the character of an enforceable instrument. |
Where enforcement is intended through a notarial acknowledgment of debt, a payment obligation tied to uncertain accounts or to a counter-performance not yet made may cause a problem for the unconditional character required. The payment obligation, the establishment of security and the release condition should be designed so that each keeps its own function. An instrument with enforceable character does not guarantee collection either. [S6–S8]
Article 18/4 of HUAK contains special provisions on the joint signature of the parties, their attorneys and the mediator where no special endorsement is mandatory, and on the joint signature of attorneys and the mediator in commercial disputes. Because matters agreed upon cannot be sued again, the scope must also be stated clearly. [S7]
Agreements transferring immovable property or establishing limited real rights under article 17/B of HUAK, and agreements under article 18/B, require an enforceability endorsement (icra edilebilirlik şerhi). For a property-related endorsement, the civil court of peace of the place where the property is located is competent; for other agreements under article 18/B, the civil court of peace where the mediator operates is competent. Under provisions added by Law No. 7531, after the endorsement has been obtained for an agreement transferring immovable property or establishing limited real rights, one party may request registration; the land registry directorate's examination then continues. Signing a protocol does not transfer ownership by itself. [S7, S9]
How should transfer, handover and record keeping be arranged?
The handover of keys, devices, stock, accounting files and digital accounts should be documented with a dated and signed inventory. For digital accounts, instead of sharing personal passwords, plan the change of authorised users and the closure of access. Where licences, lease agreements, customer contracts or permits require third-party or institutional consent on transfer, that consent cannot be replaced by an acceptance between the partners themselves. If consent is not forthcoming, the text should state what will happen to payment and what the alternative solution is.
Keeping all documents with one party and cutting off the other party's access makes proof harder in any later tax or claim dispute. A record system that complies with retention obligations should identify who is responsible for the original documents and how controlled access to copies will work. For personal data, the legal basis for processing and transfer and the security of access must be considered; liquidation, customer and employee data should not be treated as justifying an unlimited transfer. [S10–S11]
Six explained sample clauses
The statements below are examples of hypothetical legal structures. Even taken together they do not form a complete contract ready for signature; each requires an assessment of the actual accounts, representation, form and enforcement route.
Sample clause: scope of the account
"The parties have finalised the items accepted in the liquidation balance sheet they have signed. The items in the schedule of disputed receivables fall outside this acceptance; their collection and sharing will be settled separately."
Explanation: The schedules must actually be prepared and signed. An account signed without reservation may later be difficult to dispute, and items outside its scope should be identifiable.
Sample clause: payment and offsetting
"Payment takes effect in the amount credited as usable balance to the creditor's account stated in the payment schedule. Each collection is deducted at the same time from the promissory note given for the same claim and from the protocol debt."
Explanation: This wording reduces the risk of double collection. The order of offsetting between principal, interest and costs must also be determined lawfully.
Sample clause: establishing the security
"Establishment of the security agreed in the instalment arrangement, in the agreed scope, will be documented by the relevant register entry. Release of the security will take place only after it is confirmed that the debts it secures have been fully satisfied."
Explanation: The clause alone does not create a pledge. If the full debt falls due and the security has not been established, the consequence must be set separately. Where a notarial acknowledgment of debt is used for enforcement, the conditional structure is examined again.
Sample clause: conditional release
"The release will take effect, for the liquidation items that have been fixed, only when the debts in the payment schedule and the delivery obligations have been fully performed. Reserved claims are not covered by the release."
Explanation: The reserved claims must be specified. This contract clause does not replace a waiver statement to be filed with the court.
Sample clause: later-arising debt
"A third-party claim relating to the partnership or the liquidation period, which is not on the debt list, will be notified to the other partner with its supporting documents. A partner who pays externally may claim from the responsible partner the documented amount exceeding its internal share."
Explanation: The notice period, participation in the defence and the recourse calculation must be set. This clause does not limit the creditor's claim or the authority of a public body.
Sample clause: closing the files
"For each pending file listed in the schedule of open files, the settlement or procedural step to be taken will be shown separately. Payment, release of security and statements to the court will be carried out under the same action plan."
Explanation: Files do not close automatically as a result of the protocol. The type of step, the authority, the costs and the timing must be determined file by file.
What routes and time limits matter if the agreement is not performed?
Whether the dispute concerns only a money claim, the liquidation account or the transfer of immovable property affects the competent court and the route for the application. The general rule on jurisdiction and the commercial action distinction under articles 4–5 of the TTK are examined; the label "simple partnership" alone does not make a commercial court of first instance competent. For commercial money claims, article 5/A of the TTK applies, and for disputes falling within article 18/B of HUAK, the mediation condition precedent to suit is assessed. [S4–S5, S12]
Private negotiations do not suspend any action, objection or limitation period. The suspensive effect that article 18/A/15 of HUAK provides for mediation as a condition precedent operates within its own conditions. For limitation, the legal cause of the claim, the due date and the grounds for interruption must be determined; it cannot be said that "after the protocol, every claim starts the same period". Delay may lead to loss of records, a fall in the value of assets and actual insufficiency of the security. [S1, S7]
Information and documents sent for legal assessment should be handled only for that assessment and within the scope of the engagement undertaken, observing professional secrecy and the obligations under the Personal Data Protection Law (KVKK). A secure transmission channel for sensitive documents should be confirmed with the firm. Sending the first documents does not mean that the matter has been accepted.
For the amount that will form the basis of the protocol, the liquidation share calculation should be considered; if there is a concrete danger until an agreement is reached, protection of assets should be assessed. For the general stages, the main guide liquidation of a simple partnership and the legal processes may also be consulted.
Related articles: Leaving a Simple Partnership and Expelling a Partner: Rights While the Partnership Continues.
Conclusion
The reliability of a simple partnership liquidation agreement does not depend only on the amount the parties agree. Account schedules, a collectable payment debt, valid security and a release that takes effect at the right time must be built together. Before signing, particular attention should be paid to third-party debts, formal transfer transactions and how pending files will be concluded. The next step is to prepare the text suited to the chosen payment and enforcement route, together with the account that separates the accepted items from the contested ones.
Frequently Asked Questions
Must the liquidation protocol be drawn up before a notary?
There is no general notarial requirement for every protocol; the special forms of the transactions it contains remain reserved. Transactions such as a mortgage or a transfer of immovable property are assessed separately. If enforcement is the goal, a signature certification alone should not be considered sufficient; the requirements of article 38 of the Enforcement and Bankruptcy Law must be examined.
Is a release signed before payment invalid?
Not automatically. A release can extinguish a debt, so an unlimited release before collection carries serious risk. The release should be made conditional on payment, its scope should be defined and the reserved claims should be stated.
If the other partner takes over all the debts, does liability to the bank end?
Internal sharing alone is not sufficient. Release from the debt towards the bank depends on the conditions of external assumption and on the creditor's acceptance. Otherwise the bank may pursue its existing debtor, and a partner who pays may need to seek recourse against the other partner.
Does a mediation agreement always need an endorsement?
No. Under the conditions of article 18/4 of HUAK, enforceability without an endorsement is possible. However, cases in which the law makes an endorsement mandatory cannot benefit from this. In particular, the scope of articles 17/B and 18/B must be checked separately according to the content of the agreement.
Sources and legal bases
- Law No. 6098, Turkish Code of Obligations (Türk Borçlar Kanunu), in particular articles 18, 99, 117, 131–133, 146–156, 195–198, 583–584, 603, 638, 642–645. Ministry of Labour and Social Security text.
- Law No. 7589, article 10; amendment of article 1 of Law No. 3095. Grand National Assembly of Türkiye (TBMM) law text.
- Turkish Civil Code (Türk Medenî Kanunu) No. 4721, article 856 and the provisions on mortgage over immovable property. Ministry of Labour and Social Security text.
- Turkish Commercial Code (Türk Ticaret Kanunu) No. 6102, articles 4–5, 700–702, 776–778. Ministry of Justice text.
- Law No. 6100 on Civil Procedure (Hukuk Muhakemeleri Kanunu), articles 2, 74, 307–315. Ministry of Justice text.
- Enforcement and Bankruptcy Law No. 2004 (İcra ve İflas Kanunu), article 38; Ministry of Justice Training Department, Enforcement and Bankruptcy Law (İcra ve İflas Kanunu), pp. 25–26, explanation of instruments with enforceable character (ilam niteliğinde belgeler). Institutional training publication.
- Law No. 6325 on Mediation in Civil Disputes (Hukuk Uyuşmazlıklarında Arabuluculuk Kanunu), articles 17/B, 18, 18/A–18/B. Mediation Department text.
- Union of Turkish Bar Associations (Türkiye Barolar Birliği), Article 35/A Conciliation (35/A Uzlaşması), Attorneyship Law (Avukatlık Kanunu) article 35/A and the Regulation on Conciliation Procedures (Uzlaşma Sağlama Yönetmeliği). Institutional publication.
- Law No. 7531, articles 24 and 26; registration in the land registry after a mediation agreement. TBMM law text.
- Personal Data Protection Authority (Kişisel Verileri Koruma Kurumu), Obligations on Data Security (Veri Güvenliğine İlişkin Yükümlülükler). Institutional statement.
- Personal Data Protection Authority, Personal Data (Kişisel Veriler), conditions for processing personal data. Institutional statement.
- Law No. 7445, articles 31 and 34–37; mediation as a condition precedent to suit in commercial disputes and immovable property disputes. TBMM law text.