Textile producers in Turkey are struggling to keep their heads above water. Two textile companies in the country, namely Emek Kumas and Kale Iplik, have applied for bankruptcy protection, known as “concordato” to Turks, Textilegence reported on October 18.

Istanbul-based Emek, launched in 1980 by Emek Group, produces fabric and yarn for readywear brands, including   .

Tekirdag-based Kale produces yarn. Another side to its woes is that fibre-producing affiliate Firat Elyaf has applied for bankruptcy protection.

Antalya-based Ucyildiz Tekstil has, meanwhile, received a court decision declaring its bankruptcy.

Most yarn production plants in Turkey have been shut down while the remaining plants can only utilise 30% of their capacities, Textilegence quoted Fatih Dogan, head of the Mediterranean Textile and Raw Materials Exporters’ Association (ATHIB), as saying.

The problems in Turkish textile industry have also hit cotton prices in the country. Turkish cotton has become the cheapest in the world, according to Dogan.

In August, local daily Ekonomi reported that some 487 companies had gone out of business in Turkey’s textile sector in the past year.

Effects of the February double-earthquake disaster in southeastern Turkey, weaker global demand and increasing imports have hit the textile companies.

Since 2016, Turkish banks have felt substantial pressure from economic fluctuations and government demands. They have been pushed by officials into pouring in cheap loans to keep the sinking domestic economy afloat.

In 2019, Turkey faced a concordato rush as a result of the monetary tightening that was introduced following the August 2018 Turkish lira (TRY) crisis.

To overcome the bankruptcy wave, Turkey’s government introduced regulatory forbearance measures. These added to growing number of zombie companies in the country.

Thanks to the heavy forbearance, bank balance sheets have a shine that is no reflection on the actual critical situation.

With the COVID-19 pandemic, the forbearance "business" went totally out of control.

“Let’s be realistic. There are [sunk] loans that we keep afloat,” Huseyin Aydin, the then head of Turkey’s banking association TBB,  said in 2021 during his last interview in his post.

In July, the government launched a new monetary tightening cycle. The textile industry has been among the leading victims of the decision to go for higher interest rates amid rampant inflation.