GREECE Law and Practice Contributed by: Panagiotis (Notis) Sardelas, Matina Kagkelari and Aris Sifakis, Sardelas Petsa Law Firm
Debtors frequently challenge the validity of the under - lying debt or the enforcement procedure itself (eg, alleging a violation of due process or public policy), requiring the lender to engage in further litigation to confirm their rights. Recent legislation, however, restricts the grounds upon which a debtor can chal - lenge enforcement actions. The overall legislative trend in Greece aims to streamline debt recovery and minimise the scope for debtors to raise time-consum - ing, non-substantive challenges. If the debtor enters formal insolvency, an automatic stay on individual enforcement actions is imposed. Lenders may also face “claw-back” actions where security granted during a “suspect period” can be unwound. Accurately valuing collateral – particularly niche real estate or complex business assets – can be difficult, leading to disputes during the auction process. The enforcement of security – particularly against operational businesses or residential property – can be a sensitive socio-political issue in Greece. Foreign “private credit” funds may face adverse publicity, which can indirectly impact political will or regulatory decisions, even if their actions are legally sound. How Challenges Are Addressed Private credit lenders address these challenges as follows. Lenders use structures such as the bond loan frame - work, which offers a recognised agent role, to mitigate some local law friction points. Private lenders typically partner with established, BoG-licensed local credit servicing firms that possess local expertise, infrastructure and an understanding of the legal and political landscape. Lenders conduct extensive due diligence pre-invest - ment, focusing on data quality, collateral value, and potential legal or regulatory issues to anticipate chal - lenges during enforcement. Loan and security agreements are meticulously draft - ed to include express waivers of all possible debtor
and guarantor defences and to stipulate expedited enforcement methods, where permitted by Greek law. Where possible, lenders push for security struc - tures that fall under the expedited regime of finan - cial collateral law, or for pledges over claims (such as rents, invoices or bank accounts) under Greek Law 5123/2024, which allows the lender to bypass the time-consuming public auction process required for other types of securities. Greek Law 4738/2020 (the “Insolvency Code”) pro - vides for two in-court procedures: insolvency and pre- insolvency restructuring (rehabilitation). Insolvency focuses on collective creditor compensa - tion through liquidation of the debtor’s assets, while restructuring aims to compensate creditors while pre - serving and reorganising the debtor’s property. Both the declaration of insolvency and the ratification of a restructuring agreement are issued by the competent multi-member first-instance court. 7. Bankruptcy and Insolvency 7.1 Impact of Insolvency Processes Once insolvency commences, individual proceed - ings are automatically suspended. Such suspension does not extend to secured creditors, who are enti - tled to commence enforcement proceedings within nine months of the bankruptcy declaration, provided the bankruptcy application does not request that the debtor’s assets be liquidated either as a whole or in operational part. Claims against co-debtors and guar - antors continue to be executed as individual proceed - ings and remain outside the scope of insolvency. During restructuring, individual proceedings and any ongoing insolvency are suspended from filing until court ratification or rejection of the agreement, for a maximum of four months. The court may also suspend claims against co-debtors or guarantors if necessary. Upon insolvency declaration, the court appoints an administrator for the debtor’s property, who manag - es and disposes of estate assets. Exceptionally, the debtor may continue management with court approval
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