GREECE Law and Practice Contributed by: Nikolaos Koulocheris, Ioannis Charalampopoulos, Rozita Karasso and Dimitra Kotsovelou, Machas & Partners
3.5 Legal Requirements Before an Entity Can Give Valid Security Perfection requirements must be complied with for the valid establishment of a security, mainly involving reg - istrations in the competent Land Registry or Cadastre. Granting of security by corporate entities in the form of sociétés anonymes is further subject to potential related party transaction approvals and financial assistance restrictions. In particular, a special approv - al process for related party transactions is provided under Articles 99 to 101 of Law 4548/2018 for sociétés anonymes , which require approvals from the board of directors and potentially from the general meeting of shareholders, which are subject to publication formali - ties before the execution of the transaction. Financial assistance rules include restrictions on the granting of guarantees or other security interests in favour of purported acquirers or affiliate entities, and whitewash resolutions involve positive corporate benefit assess - ments. 3.6 Formalities When a Borrower Is in Default • Formalities The process of enforcing real estate security in Greece requires a court procedure and potentially a judicial sale by auction. The lender must ensure that the security is validly created and perfected. For security interests established under Legislative Decree 17.7/13.8.1923, with regard to companies under the legal form of a société anon - yme, for the benefit of credit institutions, enforce - ment is more streamlined: no enforceable title is required, while secured creditors may publish a notice for the public auction of the pledged assets immediately, bypassing the three-day waiting period that applies in the standard enforcement procedure. The most expedited and straightfor - ward enforcement process is set out for the reali - sation of security in the form of financial collateral. Aside from not requiring an enforcement title or the three-day waiting period, the financial collateral can be sold directly by the creditor, or the creditor may acquire ownership of the collateral and set off its value against the financial obligations owed by the debtor. • Priority The lender’s priority is determined by the timing of the registration of the security interest in the relevant registry, and the general rule “first in
time, first in right” (prior tempore, potior jure). There is a ranking of creditors with preferences, such as the preferential rights of the public (eg, tax authori - ties), employees (eg, wages) and hypothecatees, but also a prescribed part for unsecured creditors. These rankings determine the order in which credi - tors are paid in the event of liquidation or bankrupt - cy, with some creditors having priority over others. • Timeframe The process can take from six to 18 months to complete, depending on the complexity and any disputes raised by the borrower. • Pandemic restrictions Most pandemic-related restrictions have been lifted, though certain protec - tions for vulnerable borrowers may remain. • Market activity Lenders are more likely to opt for forbearance or restructuring rather than immedi - ate enforcement procedures, and there is a vibrant market for non-performing loans, with active inter - est from investors. 3.7 Subordinating Existing Debt to Newly Created Debt In Greek banking and finance practice, the priority of claims among a group of lenders or between two separate groups of lenders can be contractually var - ied by entering into a subordination or intercreditor agreement. This is a common practice in syndicated loans or mezzanine finance structures involving differ - ent debt tranches. Contractual subordination provisions should remain effective in the insolvency of a borrower incorporated in Greece so long as they do not alter the statutory ranking of creditors and do not conflict with manda - tory provisions of insolvency law (eg, claims with a general privilege may override contractual subordi - nation). 3.8 Lenders’ Liability Under Environmental Laws If the lender takes control of the property (eg, through enforcement of the security and especially by virtue of exercise of step-in rights), they may be considered an “operator” under environmental laws and could be responsible for remediation of contamination. Lend - ers who take control of real estate can be exposed to environmental liability, especially if they fail to prop -
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