Insolvency Law at Greece
Greece's insolvency framework has undergone significant reforms under Law 4738/2020, which came into effect on 1 June 2021. This comprehensive legislation aligns with EU Directive 2019/1023, introducing a unified system for both individuals and businesses to address financial distress. (Greek insolvency law: significant reform - Global Restructuring Review, Insolvency 2023 - Greece | Global Practice Guides | Chambers and Partners)
Key Features of the Greek Insolvency Law
1. Out-of-Court Debt Settlement (Extrajudicial Mechanism)
Revised by Laws 5024/2023 and 5072/2023, this digital platform facilitates debt restructuring without court intervention. It allows for debt reductions ("haircuts") and extended repayment terms, with up to 420 instalments for debts to banks. The process is voluntary, free of charge, and includes provisions for vulnerable debtors, such as a five-year state subsidy for loan instalments. As of December 2023, over 53,000 applications totaling €27.55 billion in debt had been processed. (Greece: Significant reform to insolvency law - Global Restructuring Review)
2. Rehabilitation Procedure
This court-supervised process enables financially distressed but viable companies to negotiate with creditors and restructure debts. It can be initiated even without the debtor's consent under certain conditions, such as cessation of payments or significant financial deterioration. The procedure aims to preserve business operations and jobs. (Insolvency and restructuring law in Greece, Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos)
3. Simplified Bankruptcy for Individuals and Microenterprises
Individuals and microenterprises with assets up to €350,000 can apply for a streamlined bankruptcy process through the Electronic Insolvency Register. The procedure is conducted entirely online, without court hearings, and aims to provide a fresh start for debtors. Creditors may intervene online to accept or reject the application. (Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos, New Bankruptcy Law | doValue Greece)
4. Early Warning Mechanism
The law introduces tools to detect early signs of financial distress, including electronic alerts and free advisory services. These measures aim to encourage proactive debt management and prevent insolvency. (Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos, Insolvency and restructuring law in Greece)
5. Bankruptcy Proceedings
The law establishes a unified bankruptcy procedure applicable to all debtors. It includes provisions for asset liquidation, creditor claims, and discharge of debts. A digital insolvency registry has been introduced to streamline the process and ensure transparency. (New Bankruptcy Law | doValue Greece, Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos)
6. Position of Creditors
Creditors play a crucial role in the insolvency process, with the ability to participate in negotiations, approve restructuring plans, and initiate bankruptcy proceedings. Their rights and obligations are clearly defined to ensure fair treatment and collective satisfaction of claims. (Insolvency and restructuring law in Greece, Restructing & Insolvency: The position of Creditors in Greece - GREEK LAW DIGEST The Official Guide to Greek Law)
Additional Resources
Chambers & Partners Guide: Provides an overview of insolvency practices in Greece. (Insolvency 2023 - Greece | Global Practice Guides | Chambers and Partners)
Zepos & Yannopoulos: Offers insights into significant reforms in Greek insolvency legislation. (Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos) (Significant reforms of Greek insolvency proceedings legislation by new Law 4738/2020 | Zepos & Yannopoulos)
Global Restructuring Review: Discusses recent developments and reforms in Greek insolvency law. (Greece: Significant reform to insolvency law - Global Restructuring Review)
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