GREECE Law and Practice Contributed by: Ioannis Charalampopoulos, Daphne Kasimati, Afroditi Kazani and Ioanna Exarchou, Machas & Partners
7.3 Length of Insolvency Process and Recoveries Insolvency processes may take up to five years, from submitting the insolvency petition to the company’s discharge. A typical insolvency process may take two years to complete. The insolvency law enacted in 2020 is currently in force and aims to streamline proceedings, improve recovery rates for creditors, and balance the interests of both debtors and creditors. However, recoveries for creditors are not always commensurate with the val- ue of the company at the time of entering insolvency proceedings. Delays, administrative inefficiencies, and volatile market conditions may impact the realisable value of assets. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency There are two available company rescue procedures outside of insolvency proceedings in Greece. The first is an out-of-court debt settlement, which is an electronic platform-based process where the debtor negotiates and enters into a debt restructuring agreement with certain creditors, including financial institutions and the Greek state. This procedure does not require court involvement or any ratification, mak- ing it a faster and less formal alternative to judicially- driven insolvency procedures. The second one is a rehabilitation procedure that involves a more structured approach, where the debt- or and its creditors negotiate a rehabilitation agree- ment, including a business plan for restructuring the company’s debts. Unlike the out-of-court process, the court must ratify the rehabilitation agreement to make it binding on all parties, ensuring that it treats creditors fairly. It may allow the company to avoid insolvency by restructuring its obligations under the supervision of the court. Both mechanisms are designed to offer flexibility and efficiency, encouraging the resolution of financial dis- tress before insolvency proceedings become neces- sary.
being completely excluded from the scope of the pre- ventive measures and may be enforced immediately. During the insolvency stage, all individual enforcement actions are suspended. However, secured creditors are exempt from such suspension regarding assets over which they hold security for a period of nine months from the declaration of insolvency. After the expiry of this period, suspension extends to secured creditors’ enforcement actions. Exceptionally, indi- vidual enforcement actions of secured creditors are suspended in cases where the court decision rules the sale of the business assets as a going concern or of its individual operating units and the asset over which security has been granted forms part of these assets. In both cases, if the sale process is terminated because no satisfactory offers were received or 18 months have elapsed since the insolvency declaration without any pending auction, secured creditors regain their right to enforce for a period of nine months after the termination date. After this period, enforcement actions are suspended for them as well. The seizure of an asset from the insolvency estate by a secured creditor remains effective until the sale of such asset through public auction or the reversal of the seizure. Again, during the insolvency process, financial col- lateral takers are not impacted by the suspension and can continue to enforce their rights without restric- tions. 7.2 Waterfall of Payments Insolvency law allows for super-senior ranking of the creditors’ claims arising out of new financing in the context of rehabilitation. The super-senior privilege applies to financing provided to keep the business operational, either in the form of cash, loans, or essen- tial goods and services. The purpose of this provision is to incentivise lenders and suppliers to offer nec- essary funding to keep the debtor’s business afloat during the rehabilitation phase, as these monies are vital for business continuity and for underpinning the restructuring efforts. In all other respects, the payment order of the credi- tors on a company’s insolvency traces the prioritisa- tion established in the Greek code of civil procedure.
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