Troubled companies will not need judicial approval for their debt restructuring blueprints
Since last Monday the process of streamlining troubled companies has been taken out of the courtroom, in the context of the new bankruptcy law.
The new legislation provides for the agreement on a restructuring plan for a company’s streamlining between the enterprise and its creditors to be agreed online following a proposal by the expert who undertakes the drafting of the plan. Therefore the role of the courts will be restricted to the ratification of the agreement, unlike what the previous law had provided for, with the involvement of justice in the actual streamlining process.
That procedure constitutes the pre-bankruptcy process aimed at the settlement of debts and the avoidance of having to liquidate a company or the property of a bankrupt individual. The condition for such a plan is that it does not harm the net position of the creditors – i.e. the banks and the suppliers who should not collect any less than what they would have in the case of the debtor’s bankruptcy and property liquidation.
The streamlining process for enterprises and entrepreneurs has specific steps, starting with the drafting of a report by an expert and a draft debt restructuring agreement. The creditors must then assess the report and approve the restructuring blueprint. The agreement will need court ratification.
The online platform for the streamlining process will become accessible from April 15 via the website of the Special Secretariat for Private Debt Management and that of the government (www.gov.gr).
The Finance Ministry announced that all certified experts will be available for the process through the Secretariat’s special register of debt restructuring experts for debtors to select their preferred expert at the beginning of the streamlining procedure. This register started operating on February 15 and can accommodate individuals or firms with specialized financial experience in debt restructuring, including economists, accountants and tax experts.