Bankrupt at a remarkable rate

By Leonidas Stergiou

The out-of-court mechanism of the new bankruptcy law is proceeding at a particularly slow pace, aiming at the overall settlement of debts to banks and the State of households and companies.

During the first six months of operation of the new bankruptcy, the electronic platform for out-of-court debt settlement, a total of 43,795 applications were submitted. Of these, 15,027 proceeded to lift banking and tax secrecy (of debtors) without following the next steps. Another 28,141 have been declassified and have reached the stage of obtaining information from banks, management companies, tax authorities and insurance funds, but have not been finalized to begin an out-of-court settlement with creditors.

Out of a total of 43,795 applications, only 627 applications were finalized in 2021 in order to start the negotiation process with creditors and to protect debtors from auctions and other legal proceedings. However, almost from these applications, the debtors requested their cancellation shortly before the start of the negotiation, either for technical reasons or to add a guarantor.

This point, that is, the guarantor, is a critical point that delays the bankruptcy process. And this is mainly related to the refusal of the guarantor or one of the guarantors to consent to the lifting of banking and tax secrecy.

Thus, they are either canceled or rejected during the negotiation process with the creditors. In total, about 250 applications out of the 627 finalized were canceled or rejected in 2021.

Of those that went ahead, ie 393, only 50 ended up in settlement. The 145 are in the stage of bilateral negotiations with the public (AADE and EFKA). The other 23 have been voted against by banks and loan managers, mainly due to the guarantor’s non-consent for declassification and consequent inability to control the assets, in order to prevent and deal with strategic defaulters.