Newsletter-21

275 LAW OF OBLIGATIONS Financial Sale and Lease Back* Assoc. Prof. H. Murat Develioglu Introduction After being in force for 27 years, Financial Leasing Code num- bered 3226 (“FLC” or “Law numbered 3226”) that had entered into force on June 28th, 1985, has been replaced by Financial Leasing, Factoring and Financing Companies Code numbered 6361 (“FLFFC” or “Law numbered 6361”), which entered into force through publica- tion in the Official Gazette dated December 13th, 2012 and numbered 28496. The application of the “ sale and lease back ” method, which occurs when the financial leasing company purchases an asset that originally belonged to the lessee and leases it back, thus providing the lessee with the opportunity to overcome any shortage of cash by utiliz- ing its machinery and equipment as a financing tool. The discussions as to whether or not the application of this system was possible have come to an end with the entry into force of the FLFFC. “ Sale and Lease Back ” in FLC and the Interpretation of the Court of Cassation The “ sale and lease back ” method was not explicitly regulated by Law numbered 3226. Consequently, the applicability of this method has been a questionable issue. The provision that gave way to these discussions was Art. 4 of the FLC titled “ Agreement. ” The financial leasing agreement was defined by this provision, as follows: “Article 4 – The agreement shall be an agreement by which the lessor grants the possession of an asset to the lessee, under the condition of non-termination for a period of time and to provide all other benefits, purchased or otherwise obtained from a third * Article of April 2016