Vol 14 (2017) - Issue 4

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Pushing Towards Efficiency: New Changes in Greek Restructuring and Insolvency Law

Introduction
Greece recently introduced Law 4446/2016, which includes important changes to domestic restructuring and insolvency law. The aim was to have in place key principles on preventive restructuring and 'fresh start' frameworks, as well as on all types of insolvency proceedings, in order to improve their quality and to efficiently tackle the accumulation of non-performing loans of ailing debtors. These amendments are to a large extent in line with the ‘Restructuring Recommendation’ of the European Commission issued in 2014 ('RR'), pushing towards harmonisation with respect to Member States’ restructuring regimes. The most remarkable amendments introduced are the following:

Changes in Greek restructuring law
Providing for an efficient out-of-court restructuring (pre-pack)
Pursuant to Article 99 par. 1 of the Greek Bankruptcy Code (hereinafter 'GBC'), as amended, the initiation of rehabilitation proceedings to negotiate an agreement with creditors following a formal court order is no longer an option. From now, on the debtor must commence restructuring negotiations at an early stage and without obtaining a relevant court order, with a view to reaching an out-of-court agreement with the requested majority of its creditors. Once the above majority has been reached, the agreement may be submitted to the Insolvency Court ('Court') for ratification. This principle has been designed to reduce the direct costs associated with using the proceedings
since every petition and appearance is costly and also to avoid delays and risk of abuse of the proceedings by debtors who merely intend to gain protection from their creditors without having prospects of viability. Furthermore, such an opportunity for the debtor, e.g. commencing the negotiations without the creditors’ permission and without publicising it to all of them, enhances the success prospects of the restructuring by keeping it secret and, thus, preserving the going concern value of the business.