GREECE Law and Practice Contributed by: Nikolaos Koulocheris, Ioannis Charalampopoulos, Rozita Karasso and Dimitra Kotsovelou, Machas & Partners
3.8 Lenders’ Liability Under Environmental Laws
employees (eg, wages) and hypothecatees, but also a prescribed part for unsecured creditors. These rankings determine the order in which creditors are paid in the event of liquidation or bankruptcy, 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 protections for vulnerable borrowers may remain. • Market Activity: Lenders are more likely to opt for forbearance or restructuring rather than immediate enforcement procedures, and there is a vibrant market for non-performing loans, with active interest 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 varied by entering into a sub - ordination or intercreditor agreement. This is a common practice in syndicated loans or mez - zanine finance structures involving different 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 mandatory provisions of insolvency law (eg, claims with a general privilege may over - ride contractual subordination).
If the lender takes control of the property (eg, through enforcement of the security and espe - cially by virtue of exercise of step-in rights), they may be considered an “operator” under envi- ronmental laws and could be responsible for remediation of contamination. Lenders who take control of real estate can be exposed to environ - mental liability, especially if they fail to properly manage environmental risks, even if they did not cause the contamination themselves. 3.9 Effects of a Borrower Becoming Insolvent In Greece, when a borrower, security provider or guarantor becomes insolvent, lenders may face the following risks: • Automatic Stay on Enforcement: Upon the declaration of insolvency, a temporary stay may be imposed on creditors’ enforcement actions, which can delay them from realis - ing their security. While secured creditors maintain priority, their ability to immediately enforce security may be limited, particularly during restructuring efforts. • Claw-Back of Transactions: Lenders face the risk of claw-back actions, which can nullify transactions made in the period leading up to the insolvency declaration. This can include preferential payments or transfers of assets that occurred within “suspect period” prior to insolvency. • Challenges to Guarantees: Guarantors may attempt to escape liability if the guarantee is not structured to cover amendments to the loan or changes in the financial status of the borrowing company. • Decline in Asset Value: Delays in the liquida - tion process or deteriorating market condi - tions may reduce the value of the assets
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