Trade Debt Arrangements
The current legislation provides businesses with effective means of successfully settling debts arising from business activities aimed at dealing with the exaggerated debts to banks, the State, the insurance funds and the economic survival of the enterprise.
Article 61 of Law 4307/2014 states the specific rules relating to arrangement for debts with provision for partial repayment or debt remission to the banks, as long as the documents provided are proving the economic and financial situation. The bank has the discretion to accept, reject or modify the arrangement by evaluating the ability of the applicant to cope with his obligations. The acceptance of the application by the bank and the settlement of the debt settlement pave the way for the remission of interest and fines for any debts to the State or the social security funds (ασφαλιστικάταμεία), under the explicit condition that they are included in a servicing schedule.However, if a debtor, under the provisions of Article 61, does not comply with the rules for a period of 3 months, the obligations under regulation shall be revived retroactively together with the sum of the surcharges, interest, and penalties for the overdue payment, which become immediately demanded and overdue.
An additional possibility for regulating company debts is offered in Article 62 of Law 4307/2014, which provides the possibility of regulating the commercial debts of a person upon his request, and only if an agreement is reached by 50,1% (the relative majority) of its creditors, including 20% of its total creditors. The arrangement may include measures to restructure the borrowing, such as debt relief, prolongation of the repayment period, debt redemption or any other appropriate measure. In order to provide the required settlement, there is a need, if there are overdue debts to the Tax Administration or the social security funds, to make them subject to a routine service plan so that the company holds a tax and social security clearance form. The application for the settlement is filed at the Court of First Instance of the registered place of business, which the main proceedings fall within the ambit ofnon-contentious proceedings. The process is rapid and it is completed within a short period of time where the judgment of the court is not subject to legal remedies. The submission of the application results the automatic suspension of pending settlement or the special liquidation requests and preventive measures may be ordered by the president of the court.
Out of Court / Εxtrajudicial Settlements of Debts
A channel for an extrajudicial settlement of loans to natural and legal persons also provides the Code of Conduct of the Bank of Greece under Law 4224/2014 for the management of non-performing loans, which establishes general principles of conduct aimed at settling debts to banks by private individuals and businesses. The Code of Conduct is the key concept for a cooperative borrower. A borrower is considered to be cooperative when he is providing full contact details to his creditors, responds frankly and clearly to the lenders’calls and letters within 15 working days and moreover he makes a full and honest disclosure of information about his current financial situation to his lenders within 15 working days of the day of change or within 15 working days of the day when such information is requested from his lenders. This will have a significant impact on his future financial situation within 15 working days since he becomes aware of his position and agrees to broaden alternative restructuring proposals. The breach of these obligations results in the borrower being classified as non-cooperative and enables the bank to initiate enforcement proceedings even at the expense of the debtor's sole domicile.
Therefore, if a debt is delayed, the bank informs the debtor, who has to respond within 15 working days by completing the standard financial statement if it is a natural person or the relevant financial information, along with the documents required to certify the financial situation of the debtor. The bank assesses on the basis of the data submitted the debtor's financial situation.
Furthermore, the bank checks the total amount of debtor’s debts, examines the current repayment ability, explores the history of his financial behavior and estimates the expected repayment capacity. After taking into account the reasonable living expenses of the debtor and his family, as determined by Hellenic Statistical Authority, the bank presents to the borrower solutions for the payment or the final settlement of its loans through the "standardized solution proposal or final settlement document" . If the borrower consents to the suitable proposal, the relevant agreement specifying the loan settlement conditions (eg: reduced installments, settlement of arrears, permanent interest rate cuts, the extension of loan duration, voluntary delivery of mortgaged property, sale and rental).