GREECE Law and Practice Contributed by: Panagiotis (Notis) Sardelas, Matina Kagkelari and Aris Sifakis, Sardelas Petsa Law Firm
and creditor consent but must collaborate with the administrator. In restructuring, the court may appoint a special proxy to manage the debtor’s property at the request of the debtor or a creditor. 7.2 Waterfall of Payments In Greek insolvency, proceeds are distributed accord - ing to a statutory waterfall under the Insolvency Code. “Super-priority” claims – bankruptcy costs, liquidator fees and interim financing – are paid first. Remaining assets are typically allocated as follows: • 65% to secured creditors; • 25% to general privileged creditors (including employee wages/severance from the last two years and state tax/social security debts); and • 10% to unsecured creditors. In practice, certain claims may be further prioritised to maintain business continuity or meet social objec - tives. Unpaid employee compensation up to a capped amount may take absolute priority for a limited period, potentially outranking secured lenders. During rehabilitation, critical vendors essential to operations are often paid in full or given preferential terms to prevent collapse. 7.3 Length of Insolvency Process and Recoveries The law imposes a maximum timeframe of five years for the process to conclude, after which the effects of the insolvency cease. However, if the business or its operational parts are sold as a whole, the process should conclude within 18 months. Historically, the recovery rates for creditors in Greek insolvency proceedings have been low, often failing to match the company’s valuation at the time of filing due to judicial delays and asset depreciation. While the current legal framework introduced streamlined mechanisms such as the sale of a business as a “going concern” to maximise value, the reliability of these recoveries remains heavily dependent on the speed of the courts, the efficient management of the
administrator and the presence of liquid markets for distressed assets. 7.4 Rescue or Reorganisation Procedures Other Than Insolvency Greek businesses can pursue an extrajudicial debt settlement for debts over EUR10,000 via a centralised electronic platform. The process enables collective restructuring with financial institutions, the State and social security funds through an automated proposal based on the debtor’s financial capacity. Once 60% of financial creditors (by claim value) approve, state entities are legally required to participate, allowing for significant haircuts and repayment schedules of up to 240 instalments for public debt and 420 for finan - cial institutions. Institutional creditors are generally obliged to accept the algorithm-generated plan if it meets the “best interest of creditors” test. During the typical 90-day negotiation period, individual enforce - ment actions are temporarily stayed to preserve the debtor’s estate. 7.5 Risk Areas for Lenders Lenders may face several risk areas. • Transactions that occurred during a “harden - ing period” can be clawed back, posing a risk to recent collateral obtained by the lender. • Insolvency proceedings generally impose a stay on individual enforcement actions. For secured credi - tors, a stay is imposed only if the court orders the sale of the business as a going concern, delaying recovery until that sale process is completed or terminated. • Claims against insolvent guarantors must be pur - sued within separate proceedings, often yielding only partial recovery. • Historically, the Greek judicial system has tended to extend recovery timelines. 7.6 Transactions Voidable Upon Insolvency Transactions during the hardening (“suspect”) period – between cessation of payments and the insolvency declaration (up to two years prior) – are subject to avoidance. Acts mandatorily voidable include gratui - tous transactions, premature debt repayments, and new security granted for previously unsecured obli - gations.
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