N E W S R E P O R T V A P L A W N O V E M B E R 2 0 1 4
B A N K I N G
LAW ON BAD LOANS
A second chance for viable companies
A large discussion has commenced lately for the recently enacted Law 4307/2014, known as the “loan for bad loans” which concerns the adoption of emergency provisional measures for the mitigation of private debt.
The law aims at dealing with the impact of the financial recession, the protection and reinforcement of employment and at an attempt to rescue an indebted, however viable company or professional activity. In parallel, it seeks the commencement of a large balance of banking loans which have been characterized as “red”, i.e. their servicing has been suspended, due to inability of the debtors and as a result they threaten the capital force of Greek Banks.
Euro 500,000 is the maximum amount to be written-off, under certain
Settlement of liabilities with biding force for all creditors.
Write-off per bank concerns one or more debts.
Subsequent settlement of debts to the Tax Office and insurance funds/agencies.
Deadline for the filing of the petition: 31-3-2016.
Terms and Conditions
The first two sections of the law (articles 60-67) contain provisions for the conditional write-off and/or settlement of debts.
The following table summarizes the main characteristics of the relevant provisions.
The applicable framework includes provisions from which many companies and professionals are expected to benefit. In all cases however, careful legal and technical financial preliminary work is required, in order to confirm with certainty the ability of those subjected, to successfully observe the terms of the final settlement that will be reached. Any non-observance of these terms will revive the written-off liabilities and renders them due and payable.
|CATEGORY||SETTLEMENT OF DEBTS OF PROFESSIONALS AND COMPANIES||SETTLEMENT OF LIABILITIES WITH BINDING FORCE FOR ALL CREDITORS|
|ARTICLES OF LAW 4307/2014||60-61||62-67|
|SUBJECTED ENTITIES||COMPANIES AND PROFESSIONALS WITH A TURNOVER ON 31.12.2013 OF UP TO EURO 2,500,000.||NATURAL PERSONS AND LEGAL ENTITIES WITH BANKRUPTCY CAPACITY, WHOSE MAIN BUSINESS INTERESTS ARE IN GREECE.|
|SUBJECTED DEBTS||DEBTS (UNDER A BUSINESS LOAN) TO BANKS AND LEASING - FACTORING COMPANIES WHICH ON 30.6.2014 WAS IN DEFAULT FOR OVER 90 DAYS OR HAD BEEN SETTLED.||GENERAL DEBTS OF LIABLE PERSONS TO THEIR CREDITORS (GENERAL ACCOUNTING OFFICE AND IFRS) EXCLUDING THE DEBTS TO EMPLOYEES, THE TAX OFFICE AND INSURANCE FUNDS.|
|CONDITIONS OF SUBJECTION||• CURRENTLY OPERATING PROFESSION & COMPANY.
• NON-SUBJECTION TO BANKRUPTCY PROCEDURE (OR TIMELY WAIVER THEREFROM).
• NON-SUBJECTION TO LAW 3869/2010 (OR TIMELY WAIVER THEREFROM).
• NON-EXISTENCE OF CONVICTION FOR SMUGGLING OR TAX EVASION OR FRAUD AGAINST THE STATE.
• SETTLEMENT OF DEBTS TO TAX OFFICE AND SOCIAL SECURITY FUNDS.
|• CONSENT OF 50.1% OF THE CREDITORS WHICH INCLUDES 50.1% OF CREDITORS WHO HAVE REAL OR OTHER SECURITIES.
• CONSENT OF AT LEAST TWO BANKS, IF THE DEBTOR HAS DEBTS TOWARDS MORE THAN ONE BANK, WHOSE ANSWER REPRESENT 20% OF ALL OBLIGATIONS OF THE DEBTOR.
• SETTLEMENT OF DEBTS TO THE TAX OFFICE & INSURANCE FUNDS.
|DEADLINE FOR SUBJECTION||31.03.2016||31.03.2016|
The third section of the law (articles 68-77) concerns the emergency procedure for the special receivership of legal entities or natural persons with a commercial capacity. The relevant provisions have in summary as follows:
Emergency procedure for the special receivership of legal entities or natural persons with commercial capacity.
– Persons subjected
Any natural person or legal entity with bankruptcy capacity, which has its registered office in Greece and is in a general and permanent inability to perform its overdue liabilities.
– Conditions for subjection
The petition is filed by a creditor or creditors of the debtor, which include at least one funding agency, who represent at least 40% of all receivables against the debtor.
– Hearing the petition
The competent court for hearing the petition is the locally competent Single-member Court of First Instance, which judges in the procedure of voluntary jurisdiction.
– Procedure and results of the filing of the petition
1. When the court accepts the petition, it appoints by its judgement the special receiver proposed in the petition, unless there are more than one petition or a main intervention with the same motion (subjection to special receivership) and a different suggestion as to the special receiver, in which case, it appoints the most suitable receiver, at its discretion, among those proposed.
2. After the publication of the judgement which accepts the subjection to special receivership, the authority of the statutory management and administration bodies of the company is vested in whole to the appointed special receiver.
3. As soon as possible after his/her establishment, the special receiver promptly prepares the inventory of the records of the company, prepares an offer memorandum and next conducts an open auction sale for the sale of all assets of the company under special receivership or of individual operating sectors or assets thereof, provided that they are not individual sectors. The procedure and the function of the special receivership cease within twelve (12) months from the date the judgement is published.
4. If the special receiver successfully completes the transfer of at least 90% of the total assets of the company (at book value) and if, according to his/her evaluation, based on the announced receivables, the proceeds of sale suffices in order to fully satisfy all creditors, he/she files a relevant petition to the competent court which may extend the appointment thereof, only for the purposes of distributing the proceeds of sale to the beneficiaries.
5. In case of full satisfaction of all creditors, the corporate bodies or the owner, as the case may be, redeem the management of the company. In any different case, the special receiver is obligated to file a bankruptcy petition for the debtor. In case a petition for bankruptcy is pending its examination proceeds.
• A turnover of Euro 2.5 million in the fiscal year 2013 is required.
• A business loan in default for 90 days, on 30-6-2014.
• The depiction of assets is required.
• The consent of 50.1% of creditors, including 50.1% of secured creditors.
Note: It is pointed out that the above outline of provisions is suggestive and summarizing and aims at providing a quick update in relation to the legal framework. Any subjection of your company to the above provisions and the conditions of this subjection constitute the object of a more complete analysis for which the provision of specialized legal advice is required.
D I S C L A I M E R