A look at corporate, personal and, where relevant, partnership insolvency proceedings in Greece, with a brief description to explain key features, as part of our Dictionary of Insolvency Terms in EU Member States. In particular, we highlight who controls the procedure and whether it is likely to be accompanied by a moratorium to prevent enforcement.
Η ειδική εκκαθάριση εν λειτουργία (Αρθ 106 ια ΠτΚ)
Special liquidation (now abolished)
- This procedure has been abolished; its aim was the continuation of the debtor’s business as a going concern for public auction.
- The procedure could be requested by the debtor or a creditor and commenced if payments to creditors had ceased or cessation was imminent.
- If approved, management of the debtor’s affairs was taken over by a special liquidator.
- During the procedure, creditors were not able to exercise any enforcement rights pertaining to the business assets under special liquidation.
Θεσμός έκτακτης διαχείρισης (Ν. 4307/2014)
Special administration procedure
- A procedure to transfer the debtor’s business as a going concern or its assets through a public auction and for creditors to be repaid from the auction proceeds.
- A petition to open the procedure and appoint a special administrator (who will take over management of the debtor’s business for 12 months) can be filed at court by the debtor’s creditors (at least one of which must be a credit or financial institution) representing at least 40% of total debts.
- Any debtor that is a legal entity pursuing a financial purpose can be subject to the procedure.
- Between commencement and a decision opening the procedure, any interested party can apply to court for an appropriate preliminary measure to preserve the debtor’s assets. Such measures will also apply to co-debtors.
- The opening of the procedure involves an automatic moratorium on all enforcement actions but does not entitle parties to terminate their contracts with the debtor or revoke licences.
- The special administrator will continue the business of the debtor until its transfer to a third party through a public auction.
Έκτακτη διαδικασία ρύθμισης υποχρεώσεων εμπόρων (με δεσμευτική δύναμη για το σύνολο των πιστωτών)
Special process for the settlement of commercial debts
- A procedure for any type of legal entity to settle its debts through an agreement with its creditors.
- The court will examine: (i) if the debtor is currently unable to pay its debts or likely to become unable to do so; and (ii) whether it has paid relevant tax debts.
- Creditors representing at least 50.1% of the total claims secured in rem must consent to the proposed settlement. At least two such creditors must be credit institutions, representing 20% of the above claims.
- The creditors’ consent is expressed through an agreement with the debtor that can provide for any appropriate measure for restructuring of the debtor's obligations, and must include an assessment of the viability of the debtor.
- Until the court decides on the agreed settlement, the debtor retains the management of its business.
- Any interested party can apply to court for appropriate measures to preserve the debtor’s or co-debtor’s assets.
- A moratorium on enforcement arises and a stay preventing the debtor and its co-debtors from disposing of their immovable assets and equipment.
- Once ratified by the court, the agreement: (i) is binding on all the parties, including non-consenting creditors, and the obligations of the co-debtors are affected in the same way as those of the debtor; (ii) results in the automatic settlement of any debts to employees; (iii) entitles the debtor to request a reduction of penalty amounts due to tax authorities; and (iv) results in a moratorium on individual enforcement actions for a period of up to three months (if provided for in the agreement) and a moratorium on collective enforcement actions for a period of up to 12 months.
Διαδικασία Εξυγίανσης(Άρθρό 99 -106(1) ΠτΚ)
- A debtor-creditor agreement aimed at rescuing the debtor’s business. It can be applied to any business (individual or legal entity) or any for-profit legal entity.
- A successful rehabilitation avoids bankruptcy whereas a successful reorganisation procedure leads to the termination of a bankruptcy procedure and the debtor regains control of the business.
- The debtor or the bankruptcy trustee may apply to the competent court to initiate the rehabilitation or reorganisation procedure. In rehabilitation, a settlement is reached as a result of negotiations between the debtor and its creditors together with a separate business plan having the same duration as the settlement agreement.
- A temporary suspension of enforcement measures against the debtor’s property may be granted by the court for the period of the rehabilitation.
- Creditors or the debtor may apply to court for the appointment of a mediator to facilitate a rehabilitation agreement between them but this is not possible in a reorganisation.
- Creditor approval of the plan is subject to the same majority in both procedures. In rehabilitation, a creditors’ meeting is not required (in such case creditors can be approached ad hoc) and the plan can be voted for by creditors representing at least 60% of claims, including at least 40% of secured creditor claims (or those with special privilege including those with mortgage pre-notations). A creditors’ meeting can be convened.
- A rehabilitation plan must be ratified by the court and is then binding on all creditors.
- A transfer of business through an approved rehabilitation plan does not require any public tender procedure, and can include a hive down to an established Special Purpose Vehicle (SPV).
Ρύθμιση χρεών μικρών επιχειρήσεων και επαγγελματιών
Debt settlement for small and medium-sized enterprises (SMEs) and independent professionals
- A natural person subject to bankruptcy proceedings and any legal entity acquiring income from business activities may file an application for this type of debt settlement procedure.
- It can only be used by SMEs with a turnover less than EUR2.5 million and small entrepreneurs.
- The settlement comprises a private agreement.
Απλοποιημένη διαδικασία επί πτωχεύσεων μικρών επιχειρήσεων (Άρθρα 162-163 ΠτΚ)
Simplified procedure for bankruptcies of small enterprises
- A simplified procedure for natural or legal persons subject to bankruptcy proceedings which applies where two of the following conditions are met: (a) the debtor's assets are valued at less than EUR150,000; (b) the debtor's net turnover is less than EUR200,000; and (c) the debtor has employed an average of five persons or fewer at any one time in the previous financial year.
- The liquidator verifies and adjudicates creditor claims and makes distributions to creditors.
Σχέδιο αναδιοργάνωσης(Αρθρα 107-130 ΠτΚ)
- An agreement between the debtor and its creditors with a view to rescuing the debtor’s business. It can be applied to any business (individual or legal entity) or any for-profit legal entity.
- Any debtor is allowed, within four months of being declared bankrupt or filing a voluntary bankruptcy petition, to propose a reorganisation plan. A liquidator may also propose a reorganisation plan.
- Acceptance of a reorganisation plan requires a majority of 60% of total claims, at least 40% of which must be secured. Following judicial pre-approval, a creditors’ meeting votes on the plan. Once the plan is accepted, it requires judicial ratification.
- Ordinarily a liquidator will take control of the business but the bankruptcy court can permit the debtor to do so, subject to a liquidator’s cooperation.
- Between the filing of the petition for bankruptcy and the order, the bankruptcy court (on application of any party with a lawful interest) can order any measure to prevent alteration or depletion of the debtor’s estate that is detrimental to creditors.
- The declaration of bankruptcy puts into immediate effect a moratorium on all enforcement actions by unsecured and general preferential creditors.
- Secured creditors cannot continue pursuing claims against secured assets that are closely connected to the debtor's business until the reorganisation plan is approved. Any enforcement procedures attempted during the suspension are null and void.
Η πτώχευση (Αρθρα 1-98 ΠτΚ)
- Bankruptcy is initiated with a view to the collective satisfaction of creditors’ claims by liquidating the debtor’s estate or by a reorganisation of the debtor’s business.
- Bankruptcy proceedings can be initiated by or against any business (individual or legal entity) or any for-profit legal entity. Any debtor that has ceased payments in a general and permanent way (defined as an inability to pay debts as they fall due) must file a bankruptcy petition within 30 days following cessation of payments.
- A debtor that is in imminent financial distress can also file a bankruptcy petition as can a creditor, provided the debtor has ceased payments in a general and permanent way.
- Once a debtor is declared bankrupt, an insolvency administrator (syndikos) will be appointed to manage the debtor’s assets and affairs. In exceptional circumstances, a debtor can remain in control of its assets and affairs, with the insolvency administrator’s cooperation. The bankruptcy court and the court-appointed reporting judge supervise the bankruptcy proceedings.
- On the submission of an application for a bankruptcy declaration and until the grant of the relevant order, a stay against all enforcement actions can be provided as a preliminary measure.
- Once the debtor is declared bankrupt, all unsecured and general preferential creditors are barred from enforcing their rights and remedies against the debtor.
- Secured creditors can continue to pursue claims against secured assets unless the secured assets are closely connected to the debtor’s business, production unit or enterprise.
- The stay remains in place until either a reorganisation plan is approved or the creditors’ committee decides whether the liquidator will: (i) continue the debtor’s commercial activities for a certain period of time; (ii) lease the business; (iii) sell the company as a going concern through a public auction; or (iv) proceed to a piecemeal sale of the debtor’s assets.
- Liquidation proceedings are concluded on liquidation of all the debtor’s assets.
Ρυθμίσεις για τους ενέγγυους πιστωτές
Provisions for secured creditors
- Secured creditors are higher ranked than unsecured creditors and thus receive priority payment from liquidation proceeds.
- Any suspension of individual actions during insolvency proceedings does not apply to secured creditors in relation to the secured assets of the insolvency estate.
- Security interests over movable assets, real estate, aircraft and ships can only be enforced in enforcement proceedings, in accordance with the applicable procedural requirements of the Greek Code of Civil Procedure.
- Security interests over bank accounts, trade receivables, insurance claims and generally monetary business claims and security interests qualifying as financial collateral (within the meaning of Directive 2002/47/EC on financial collateral arrangements, transposed into Greek law by Law 3301/2004) can normally be enforced without formal enforcement proceedings.
Anticipated changes in the next two years
The EU Directive on Restructuring and Insolvency1 requires Member States to incorporate minimum common standards into their national restructuring and insolvency laws by 17 July 2021. The intention of the Directive is to reduce barriers to the free flow of capital stemming from differences in Member States’ restructuring and insolvency frameworks, and to enhance the rescue culture in the EU.
Notable features required to be included in Member States’ national laws include:
- An effective preventive restructuring framework to enable debtors experiencing financial difficulties to restructure at an early stage, with a view to preventing insolvency and ensuring their viability.
- A stay of up to four months extendable to up to 12 months to support negotiations of a restructuring proposal, which should prevent individual enforcement action and include rules preventing the withholding of performance, termination, acceleration or modification of essential contracts.
- An ability to cram down dissenting classes of creditors.
- Adequate protection for financing needed to allow the business to survive or to preserve the value of the business pending a restructuring, and for new financing necessary to implement a restructuring plan.
- Provision for honest, insolvent entrepreneurs to have access to a procedure that can lead to a full discharge of their debts (subject to limited exceptions) within three years.
Contact: Orestis Omran
1 Directive (EU) 2019/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017/1132.