In Distressed Commercial Loans, the Core Issue is Restructuring, Not Collection

The main debate on distressed commercial loans in Turkey focuses on collection rates and execution processes. This focus is understandable; short-term balance sheet concerns of creditor institutions directly shape resolution preferences. However, this approach has a serious cost.

A distressed commercial loan becomes a problem not only for the banking system, but also for the real economy, impacting employment, supply chains, and regional economic activity. A collection-oriented approach often liquidates this structure, while a well-designed restructuring can generate higher value for both the creditor and the debtor.

For a restructuring decision to be correct, the right question must be asked first: Is the value generated by this business sustainable, independent of debt? Does the cash flow structure allow for healthy debt service? Is the problem temporary, or is it in the business model itself?

Systematically answering these questions prevents collection pressure and makes it possible for truly salvageable businesses to survive.