Online Participation to the Sales via Enforcement
Abstract
The great advancement of technology affected the debt enforcement law as well, and the performance of sales in enforcement proceedings through online systems came into our lives. The new methods such as online public auction and electronic proposal submission system are introduced to the system of debt enforcement, as an alternative to the traditional bureaucratic system, for the purpose of enabling faster and more effective results, which is in the benefit of both creditors and debtors. However, although this online system aims to increase the efficiency of the debt enforcement process, it failed to reach the efficient level of usage and participation due to the insufficiency of electronic infrastructure and unfamiliarity of potential users with the system. An extensive legislative action in this subject is needed, as well as an infrastructural action for increasing the trust of users to the system.
1. INTRODUCTION
Under Turkish Enforcement and Bankruptcy Law, the creditor should be satisfied with money regardless of the characteristic of seized property in the enforcement process. Although different types of property such as asset or real estate can be seized as a result of the debt-follow up process, the receivable of the creditor should be paid with cash in any case. Therefore, when an asset other than money is seized via enforcement, the encashment procedure regulated in the articles 106 and following of the Enforcement and Bankruptcy Law (“EBL”) will apply in order to satisfy the creditor.
In principle, the encashment of the seized property is conducted with a sale by public auction. By this way, it is aimed to maximize the possible amount of money which is obtained through the sale. In accordance with this aim and changing and developing technology, the article 126/4 of the EBL prescribes that public auctions shall be performed first in the online platform with the offers made through electronic systems and sets out the provisions concerning this procedure.
In this article, the advantages of the online participation method to the sales in enforcement proceedings through electronic offers and the problems associated with this method are analyzed, and, following, some pertinent practical problems are discussed. The negotiated tendering, which is another encashment method, does not involve electronic participation opportunity, therefore it is not covered in this article.
2. ONLINE PARTICIPATION TO THE SALES VIA ENFORCEMENT
The enforcement procedure, which is the enforcement of unfulfilled obligations with the help of the public force, aims to protect the rights and benefits of the people who fail to obtain their receivable by themselves1. Accordingly, the assets belonging to the debtor are seized without his/her consent and the creditor is satisfied through the sale and encashment of the seized assets.
The procedure of encashment of the seized assets is regulated in the articles 106 and following of the EBL and pursuant to these articles it is mandatory to pay the creditor with cash. According to this, the encashment process beginning upon the creditor’s request for sale ends by reaching the sufficient amount for debt through the sales of the seized assets or by the exhaustion of the all seized assets in any case2. The objective of this method is both to satisfy the creditor as providing the possible highest price through the sale of the seized assets and to balance the benefits -of creditor and debtor in accordance with the most basic principle of the Enforcement and Bankruptcy Law. Indeed, increasing the price obtained through the sale of the seized assets to the possible highest amount will both lead to the satisfaction of the creditor’s rights at the highest level and the discharge of the debtor from his/her arrears.
The sale in enforcement proceedings starts upon the request of the creditor or debtor as it is comprehensively explained in the EBL. The sale procedure is completed in two months following the request if the seized assets are movable property. If the seized assets are real estate, sale procedure is completed in three months. However, the sales of the both seized movable properties and real estate are conducted with a public auction, and the public auction begins with the online offers. Online participation to a public auction is conducted through the National Judiciary Informatics System. Pursuant to the article 8/a of the EBL, the National Judiciary Informatics System is to be used for any kind of enforcement and bankruptcy proceedings made by the enforcement and bankruptcy offices, and any kind of information, data, document and decision is processed, saved and stored by National Judiciary Informatics System. By doing so, a uniform and reliable application is provided by one single system.
In the movable asset sale procedure, the time period for online offers starts 10 days prior to the first auction and continues until 23:59 p.m. the day before the first auction is made. As for the second auction, the time period for online offers starts the fifth day after the first auction and finishes at 23:59 p.m. in the day before the second auction is completed, which is determined at least 10 days after from the first auction. Online offers cannot be less than fifty percent of appraisal value of the seized assets. In addition, a collateral valuing twenty percent of appraisal value of the seized assets must be provided.
In the real estate sale procedure, the time period for online offers starts 20 days prior to the first auction and continues until the day before the date of first auction 23:59 p.m. As for the second auction, the time period for online offers starts the fifth day after the first auction and finishes in the day before the second auction is completed, which is determined at least 20 days after from the first auction 23:59 p.m. Online offers cannot be less than fifty percent of the appraisal value of the seized assets. A collateral valuing twenty percent of appraisal value of the seized assets must be provided as well.
The incomes generated in the auctions conducted according to procedures, which are briefly explained above within the frame of legislation, are paid to the creditor/ creditors by cash. In terms of encashment of the pledged asset, the procedure for the sale of the ordinarily seized assets is applied to the sale of pledged assets, as stated by the article 150/g of the EBL. Therefore, the procedure explained above is applied for the sale of pledged assets as well.
3. ADVANTAGES OF ONLINE PARTICIPATION METHOD
The common usage of electronic systems by individuals in every aspect of life, as a necessity of being a knowledgebased society, has driven the State to the same direction. And as a natural consequence of that, e-State concept has emerged. In parallel with e-state application, which is defined as “delivering low-cost public services to community, private sector and other public institutions faster and much more effective through electronic information and communication technology3’', National Judiciary Informatics System (“UYAP”) has been developed, and its use has been promoted in the judicial services.
One can offer a bid electronically for the auctions performed by the enforcement and bankruptcy offices by means of UYAP, which has been developed in order to make it possible to conduct the official proceedings in an electronic platform without being limited to work hours and without necessity of going to Courthouse physically. The usage of UYAP becomes more and more prevalent every day. By this means, true and just appraisal of the seized assets is provided thanks to the increased number of bidders and the transparency of the auction proceedings.
Considering the usage of electronic and mobile signature not being as prevalent as expected, the provision providing for offering bids without electronic or mobile signature is an appropriate regulation for the purpose of increasing the number of bidders. In addition to this, the possibility of placing bids electronically in all auctions, without restriction, performed by enforcement and bankruptcy offices increases the functionality of the system as well.
The electronic participation method renders efficient auctions by the means of automatic notice to the prior bidders through UYAP SMS application in the case that higher bid is placed by another bidder. It is possible to place an online offer until the day before auction 23:59 p.m., not only in working hours of enforcement and bankruptcy offices. This also provides an extended time to place bids and reaching the true value of the seized property. Besides that, it is possible to place bids automatically in response to highest bid with the automatic bidding option which is compatible with the purposes of online auction system. Automatic bidding option is only available for online offers, not for those made in person.
The successful bidder, once registered as the winner, he/she can get the information regarding the auction through e-State system; in the offers sections on the esales portal. By this means, the transparency of the system is ensured.
4. PROBLEMS ON THE PRACTICE
Besides the aforementioned benefits and advantages of the electronic participation system, the obligation to hold bank account of one specific Bank in order to be able to offer bids and non-acceptance of commonly used payment methods, such as credit card or any other digital payment methods to pay the required deposit, are considered as negative sides of the system.
These conditions limiting the number of bidders thusly disallow assessing the true economic value of the seized asset. Since our E-state system is not at the desired standards as of now in terms of infrastructure due to technical malfunctions, the public confidence has not been established yet4. Also, the legislation for protection of personal data in electronic environment is still pending. Further, e-state projects have not reached to the expected speed. Those are all considered as major problems with respect to establishment of the system5.
5. CONCLUSION
Beyond all question, it has been an effective method to be able to place bids electronically as it promotes the participation at auctions, and it helps assessing the true economic value of the seized assets. Especially, this method has provided a balance between creditors’ satisfaction of his rights and debtor discharge from his debt by enabling much more people to place bids electronically.
But still, there are factors restricting to place bids online such as the requirement to have a specific bank account and non-acceptance of credit card payment for required deposits. On all accounts, as stated in doctrine as well, in order to increase the efficiency of online auctions in debt enforcement proceedings, there is a need for a legislation eliminating above mentioned problems and reinforcing the basic principles in this respect. Nevertheless, despite the existence of some practical problems, the enablement of electronic bids in debt enforcement proceedings promotes both the principle of transparency and the very purpose of auction.
BIBLIOGRAPHY
“E-devlet Genel Gerekçe”, 24.03.2015, http://akgul.bilkent.edu.tr/e-devlet/ gerekce.doc
Baki Kuru, İcra ve İflas Hukuku El Kitabı, (Ankara: Adalet Yayınevi, 2013)
Baki Kuru, Ramazan Arslan ve Ejder Yılmaz, İcra ve İflas Hukuku Ders Kitabı, (Ankara: Yetkin, 2013)
Burçin Buran, Türk Vergi Hukukunda Haciz ve Elektronik Haciz Uygulaması, (Manisa: 2013)
Kayhan Delibaş ve Ali Erdem Akgül, “Dünyada ve Türkiye’de E-devlet Uygulamaları: Türkiye’de E-demokrasi ve E-katılım Potansiyellerinin Harekete Geçirilmesi”, Sosyoloji Araştırmaları Dergisi, Cilt 13, Sayı 1, Bahar (2010)
Tülay Baran, “Türk Vergi Sisteminde Cebri İcra Yollarından Haciz Yolu İle Tahsil Elektronik Haciz Uygulaması”, (İzmir: 2014)
Footnote
1 Baki Kuru, İcra ve İflas Hukuku El Kitabı, (Ankara: Adalet Yayınevi, 2013), 47.
2 Baki Kuru, Ramazan Arslan ve Ejder Yılmaz, İcra ve İflas Hukuku Ders Kitabı, (Ankara: Yetkin, 2013), 304.
3 Kayhan Delibaş ve Ali Erdem Akgül, “Dünyada ve Türkiye’de E-devlet Uygulamaları: Türkiye’de E-demokrasi ve E-katılım Potansiyellerinin Harekete Geçirilmesi”, Sosyoloji Araştırmaları Dergisi, Cilt 13, Sayı 1, Bahar (2010): 105.
4 Burçin Buran, Türk Vergi Hukukunda Haciz ve Elektronik Haciz Uygulaması, (Manisa: 2013), 101.
5 Tülay Baran, “Türk Vergi Sisteminde Cebri İcra Yollarından Haciz Yolu İle Tahsil Elektronik Haciz Uygulaması”, (İzmir: 2014), 128.
6 “E-devlet Genel Gerekçe”, 24.03.2015, http://akgul. bilkent.edu.tr/e-devlet/gerekce.doc.
