The process of business rehabilitation under Article 99 of the Greek Bankruptcy Code
15 January 2017
Pre-bankruptcy proceedings, aiming at preventing declaration of bankruptcy, include the newly provided (by Greek Law No. 4013/2011) process of business rehabilitation [under Articles 99 to 106(ia) (as per the original text numbering) of the Greek Bankruptcy Code, hereinafter referred to as “GrBC”, i.e. Greek Law No. 3588/2007]. This process aims at the continuity, development, restructuring and reconstruction of the business, by means of concluding an agreement between the debtor and the majority of creditors, without any prejudice to the collective satisfaction of creditors.
The process of business rehabilitation may be initiated upon the debtor’s request (natural person or legal entity, who have capacity for bankruptcy proceedings to be brought against them) by filing a petition before the Court hearing the bankruptcy, only in case of a current or imminent general default to pay their financial obligations as they fall due.
The various parties participating in the process of business rehabilitation are the following:
- The expert
- The mediator
- The specially authorised legal agent
The effects of initiating the process of business rehabilitation are not directly provided for in the law, i.e. business rehabilitation does not entail any corresponding consequences as those deriving from disinvestment, stay of legal proceedings against individuals, or dissolution of legal entities. There are no such institutions as the right to claim assets, or revocation of bankruptcy. Moreover, there is no process of notice of schedule (listed creditors) and verification of their respective claims. The business continues to operate normally.
The business rehabilitation agreement should be concluded and lodged with the court hearing the bankruptcy for ratification within the time limit specified by the court in its ruling on initiation of the process. In the event that no such agreement is entered into until the expiry date of the set period of time, or if no petition for its ratification is filed, the process is ex officio considered to be terminated, and the duties of any appointed mediator and specially authorised legal agent are brought to an end.