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[BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS IN GREECE]
KEY FACTS OF BANKRUPTCY, INSOLVENCY & REHABILITATION PROCEEDINGS UNDER GREEK LAW
Introduction In the Greek law there are several types of proceedings addressing the inability of a merchant debtor (either a natural person or a legal entity) to pay its debts. On one hand, there is Bankruptcy, which is focused mainly on the payment of its debts to its creditors, mainly by liquidation of the debtor’s assets. On the other hand, there are the so-called pre-bankruptcy proceedings whose main purpose is to maintain the debtor’s un dertaking by a restructuring of its debts. The pre-bankruptcy proceedings are the Rehabilitation Proceedings and the Out of Court Workout. Before and during the aforementioned bankruptcy and pre-bankruptcy proceedings, protection of the debtor’s assets may be provided for the purposes of each procedure. As a result, there are restrictions for the debtor regarding the freedom of administration or transfer of its assets and for the creditors regarding the enforcement of their claims on the debtor’s assets. It must be noted that the law 4738/2020 “Restructuring of debts and provision of a second chance and other provisions” has been issued, which abolishes the Bankruptcy Code
agreement does not necessarily include liquidation). The goal of the rehabilitation proceedings is to achieve a rehabilitation agreement between the debtor and a minimum required number of its creditors and to submit it to the competent court, along with a business plan. Subsequently, the rehabilitation agreement is validated by the court. So, there is no formal procedure opening of the negotiations with the creditors, only a “pre - packed” agreement between the creditors and the debtor that is submitted to the court for validation. Also, if the debtor is in a “cessation of payments” (in the meaning of the ba nkruptcy law), the creditors may also agree a rehabilitation agreement even without the debtor’s participation. 2. The Protection Granted to the Debtor’s Assets in Rehabilitation proceedings A protection may be granted to the debtor’s assets during three different stages: a) before concluding the rehabilitation agreement, i.e., during the negotiation between the debtor and its creditors; b) at the time that the rehabilitation agreement has been concluded and submitted to the court, but it is not validated yet and c) after the validation of the rehabilitation agreement from the court. More specifically: 2.1 The protection before concluding the rehabilitation agreement 2.1.1 The Procedure Before concluding the rehabilitation agreement and during the negotiation between the debtor and its creditors, no protection is granted to the debtor automatically by the law. However, the debtor or a creditor may apply, only once, to the competent court for protection of the debtor’s assets by ordering Provisional Measures, as an
and the other relevant legislation. I. The Pre-Bankruptcy Proceedings
A. Rehabilitation 1. The Procedure
The rehabilitation proceedings of art. 31-64 of the L. 4738/2020 have a different purpose than bankruptcy, which is to reach a settlement/ rehabilitation agreement between the debtor and its creditors, so that the undertaking of the debtor will become viable again. Thus, the target of rehabilitation is not the liquidation of the assets, as it is in bankruptcy (the settlement
ILN Restructuring & Insolvency Group – Bankruptcy, Insolvency & Rehabilitation Series
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