A Turkish construction company which is being chased by more than two dozen Maltese firms for dues of some €7 million has filed legal proceedings in its home country and placed under the administration of court-appointed administrators.

TACA told the Istanbul Commercial Court that while it was not insolvent, it needed time to settle its due with various creditors.

According to documents seen by Times of Malta, the Maltese companies were not listed as the firm’s creditors. The Turkish court upheld the request and gave the company’s directors three months to get its house in order. In the meantime, the company will be managed by the administrators who had to send the court reports every 15 days.

Legal sources said the company filed an application which is equivalent to the Maltese special recovery procedure where companies going through financial difficulties are placed under the supervision of court-appointed experts.

The three months window was requested by TACA in an attempt to settle its dues. However, the procedure under Turkish law also protects the company from further legal proceedings.

TACA Construction – based in Turkey’s capital, Ankara – is a giant firm which had entered into contracts with Maltese developers involved in the building of large projects across the island.

TACA was working on a number of projects in Malta including the Fortina redevelopment project in Sliema, the new wing at St Vincent de Paul home for the elderly and work on the db Group’s City Centre project at St George’s Bay.

However, trouble began brewing at the beginning of this year when the workers complained the company had not paid them their salaries. In June, some of the workers said they had not been paid for up to five months and did not even have money to buy themselves some food.

According to the court documents seen, the problem was not limited to the payment of salaries as it also emerged that suppliers, too, were not being paid for the building materials they provided and services they rendered.

The request, pursuant to the Turkish enforcement and bankruptcy law, was filed in early November, the same day that Times of Malta revealed how more than 24 local companies had filed legal proceedings to recoup a total of about €7 million they are owed by for building supplies and services rendered.

The companies are insisting they are owed money ranging from a few hundred euros to hefty bills of more than €2 million.

Requests for garnishee orders have been upheld and most creditors went on to file individual cases in court after the Turkish company ignored the court proceedings filed by the Maltese firms to recoup any money they can.

'Significant amount of claims are wrongful'

In reply to Times of Malta’s questions about the situation, TACA’s board of directors said that a “significant amount” of the claims are “wrongful” and “will be strongly contested in the relevant courts and international arbitration proceedings”.

“TACA will do everything within its power to fight back by legal means on the basis of signed contracts both for itself and for its bona fide creditors, who have been affected. To this effect, TACA has been updating regularly its bona fide creditors about its position and is confident that its claims will be recognised and prevail in litigation,” the board said in a statement.

“TACA is very much aware of both its rights and obligations and it will continue to invest all resources necessary to safeguard its rights at law,” it added.