Source: https://www.insol-europe.org/eu-draft-directive-greece
Timestamp: 2019-08-23 02:44:23
Document Index: 554423471

Matched Legal Cases: ['Art. 6', 'Art. 9', 'Art. 10', 'Art. 12', 'Art. 15', 'Art. 16', 'Art. 6', 'Art. 8', 'Art. 9', 'Art. 10', 'Art. 12', 'Art. 15', 'Art. 16', 'Art. 6', 'Art. 9', 'Art. 10', 'Art. 14', 'Art. 15', 'Art. 16']

eu draft directive greece - INSOL Europe
‘ΔΙΑΔΙΚΑΣΙΑ ΕΞΥΓΙΑΝΣΗ’ (RECOVERY PROCEEDINGS)
- Compliance with articles 5, 6, 7, 8, 9, 10, 12, 14 para. 1, 15, 16 and 17.
Art. 6 and 7: In recovery, from the submission of the recovery agreement to the Bankruptcy Court until the issuance of its decision there is an automatic stay for a 4-month period on all individual and collective enforcement measures against the debtor (including the filing of a petition for the declaration of bankruptcy). Such automatic moratorium is granted to the debtor only once. Any moratorium regarding enforcement action automatically prevents transfer of the debtor’s immoveable property and equipment.
In case the Court’s decision is not published within the 4-month period, the Court may grant a suspension on all individual and collective enforcement measures against the debtor or any other preventive measure. However, in this case, unless the court decides otherwise, a provisional moratorium will not prevent the enforcement of employee claims. Unlike bankruptcy, the stay affects as well secured creditors.
Before the submission of the recovery agreement, a moratorium may be granted -at the request of the debtor or the creditors- if a creditors’ declaration in writing of 20% of the total claims is submitted provided that there is an imminent danger. Such stay can be granted by the court only once and for a maximum period of four (4) months.
Art. 9: The Greek Bankruptcy Code (‘GBC’) provides for three main categories of creditors (i.e general preferential creditors: claims of employees that arose two years prior to the declaration of bankruptcy and employment termination compensation, claims of the State and social security funds, secured creditors: creditors with claims that are secured by a right in rem over a particular asset – or class of assets (fixed or movable), claims or monies, and unsecured creditors).
The principle of equal treatment of creditors applies to creditors of the same category. Any deviation from the above principle must be justified by important business or social reasons or in case the prejudiced creditor consents to such deviation.
Art. 10: A recovery agreement will be judicially confirmed if:
• it is signed by creditors representing a majority of 60% of the total claims, 40% of which should be secured.
• it renders the debtor viable;
• non-signatory creditors receive at least as much as they would receive through bankruptcy liquidation;
• it does not violate any mandatory legislation, such as competition law, or is the result of fraud conducted by the debtor or any creditor or any third party;
• creditors of the same class are treated equally and any exceptions are justifiable by important business or social reasons or in case the prejudiced creditor consents; and
• it lifts the debtor out of cessation of payments.
Art. 12: The GBC provides that in case the debtor is in imminent inability to pay its debts as they become due or if there is a mere possibility of insolvency, and the shareholders or the partners of the debtor appear to refuse to cooperate for the implementation of the recovery agreement in an abusive manner (i.e. not for the purpose of protecting their financial interests in the debtor), the court may appoint an insolvency professional as a special agent authorised to attend and exercise the voting rights of such hold-out shareholders or partners.
Art. 15: The GBC provides that the decision that ratifies the recovery agreement may not be appealed. Solely the decision that rejects the application for the ratification of the recovery agreement may be appealed. However, the decision that ratifies the recovery agreement is subject to a third-party opposition that may be exercised from any person that has a lawful interest and who was not summoned to the hearing. The deadline for the exercise of such opposition is 30 days from the publication of the decision.
Art. 16 and 17: Creditors that pursuant to the recovery agreement, provide loans or credit or supply goods and services to the debtor for the continuation of its business activities, are ranked as first-class general preferential creditors, superseding all other creditors. Creditors that provided loans or credit or supplied goods and services during the negotiation period for the conclusion of a recovery agreement, regardless of its ratification and if it is provided within the terms of the recovery agreement, are also ranked as first-class general preferential creditors superseding all other creditors. In this case, the loans or credit must be provided within a time period of six months prior to the submission of the recovery agreement.
The GBC provides for the satisfaction in full of the above super-seniority claims arising from loans or credit provided to the debtor, when general preferential claims coincide with secured and unsecured claims or in the case where general preferential claims coincide with unsecured claims.
‘ΣΧΕΔΙΟ ΑΝΑΔΙΟΡΓΑΝΩΣΗΣ’ (REORGANISATION PLAN)
Judicial ratification of a reorganisation plan submitted by:
- Compliance with articles 6, 7, 8, 9, 10, 12, 14 para. 1, 15 and 16.
The reorganisation plan falls within the scope of the draft Directive proposal solely in case where the debtor faces a mere possibility of insolvency. In this case the debtor must submit a reorganization plan along with the submission of a bankruptcy petition.
Art. 6 and 7: Contrary to recovery, the declaration of bankruptcy and the placement of the debtor into reorganization entail a moratorium on all enforcement actions by unsecured creditors. Secured creditors cannot continue pursuing their claims against the secured assets that are closely connected to the debtor’s business or production unit or enterprise until the reorganisation plan is approved.
Upon filing for declaration of bankruptcy and until the grant of the relative order, a moratorium against all enforcement actions (including the involuntary grant of security over assets) may be provided by the competent court as a preliminary measure.
Art. 8: The proposed reorganisation plan must include:
• information relating to (a) the current financial status of the debtor and the reasons that led to its financial distress and (b) the proposed satisfaction of creditor pursuant to the plan when compared to the satisfaction of creditors in case of liquidation;
• description of the restructuring measures that have already been taken or of the restructuring measures that are provided within the reorganisation plan such aas financing of the debtor, debt-to-equity swap, corporate restructuring, successful continuation of the business activity or transfer of the business.
Art. 9: The plan must mandatorily provide for secured creditors, general preferential creditors, unsecured creditors and subordinated creditors. Employee claims constitute a particular class. Claims of unsecured creditors that are of diminished value may be classified separately. Within a particular class, more than one group of creditors may be provided. The plan must provide equal treatment among creditors of the same class, or among creditors of the same group.
Art. 10: The bankruptcy court may reject the plan if:
the formalities with regard to the mandatory features of the reorganisation plan, the classification of creditors, the majority of creditors and the debtor’s consent are not met;
the acceptance of the plan is the consequence of a malicious act perpetrated by the debtor, any creditor, the bankruptcy administrator or any third party
rejection is dictated by public interest; or
the plan prejudices the interests of dissenters, especially in case that they will receive less than they would have in case of bankruptcy liquidation.
Art. 12: The same rule as in the recovery process applies.
Art. 15: The court decision that either ratifies or rejects the plan is subject to an appeal. The appeal does not suspend the execution of the reorganization plan.
Art. 16: Creditors that pursuant to the reorganisation plan, provide loans or credit to the debtor for the continuation of its business activities, are ranked as first-class general preferential creditors, superseding all other creditors.
In reorganisation, there is not the same treatment as in recovery procedure of creditors who supply goods and services to the debtor. As a result, their claims are not are ranked as first-class general preferential creditors.
‘ΕΞΩΔΙΚΑΣΤΙΚΟΣ ΜΗΧΑΝΙΣΜΟΣ ΡΥΘΜΙΣΗΣ ΟΦΕΙΛΩΝ ΕΠΙΧΕΙΡΗΣΕΩΝ’
[OUT-OF-COURT WORKOUT (‘OCW’) FOR BUSINESSES]
- Compliance with articles 5, 6, 7, 8, 9, 10, 14 para. 1, 15 and 16.
The OCW has a main objective the rescue of viable debtors. It is a mainly collective procedure through which all the financial obligations of viable debtors are settled through the conclusion of a debt settlement agreement with the majority of their creditors (including both private creditors and the public sector i.e. the Greek State, the social security funds and entities governed by public law). Moreover, in terms of its objective, it is a reorganization process that may be requested by any company and natural person that can be declared bankrupt under the GBC. The debtor and its creditors can freely decide on the content of the debt restructuring agreement. A significant restriction to this rule is that the creditors shall receive at least the amount they would receive in the event of liquidation of the debtor’s, the co-debtors’ and guarantors’ estate (no creditor worse off principle). Finally, mention should be made to the fact that although the process is named as "extrajudicial", it should be though ratified by the Court in order to have a cram-down effect.
Art. 6 and 7: According to the OCW, the service of an abstract of the debtor’s application to its creditors as well as the notification of an invitation with regard to the creditors’ participation in the process entails an automatic suspension of all individual and collective enforcement measures for a period of 70 days which can be extended for additional period of 4 months with the consent of the majority of participating creditors. In case the restructuring agreement is submitted to court for confirmation, such suspension may be extended until the issuance of the court decision.
Art. 9: The restructuring agreement is approved by a majority of 3/5 of the participating creditors including 2/5 of the participating secured creditors. The participating creditors must represent at least the majority of the total claims against the debtors.
Art. 10: The competent court may reject the application for confirmation of the restructuring agreement if:
The ‘no creditor worse off’ principle and the special rules applying to the claims of the State and Social Security Funds, are violated; or
There is a violation of procedural rules provided that the damage caused is irreparable; or
creditors representing claims of an amount sufficient to reverse the restructuring agreement were not invited to participate in the process
the debtor does not fulfill its financial obligations under the executed agreement
Art. 14 para. 1: Although the process is named as "extrajudicial", it should be ratified by the competent court in order to have a cram-down effect.
Art. 15: The OCW provides that the decision that ratifies the restructuring agreement may not be appealed or subject to a third-party opposition. Solely the decision that rejects the application for the confirmation of the restructuring agreement may be appealed.
Art. 16: The OCW establishes that the provision of credit or supply of goods and services to the debtor for the continuation of its business activities that was made simultaneously with, or after the execution of the restructuring agreement, is satisfied in priority, superseding all other creditors.
There are not any adaptations (either to existing procedures or by introducing new ones) that have been discussed/planned in order to meet the directive’s requirements but as a reminder Law No. 4469/2017 introduced the new procedure for the extrajudicial debt settlement, which sets as its main objective the rescue of viable debtors.