Supreme Court allows servicers’ auctions

Supreme Court allows servicers’ auctions

In a closed-door session, the plenary of the Supreme Court has resolved an issue that had arisen with the managers of bad loans, judging that the current legislation allows them to take procedural actions – i.e. to participate in auction operations.

Sources say that during the plenary session an overwhelming majority voted for the legal opinion that loan and credit management companies can act as parties under their own name, representing the funds that have invested large sums of money in buying nonperforming loans from credit institutions.

The decision was taken by a majority of 59 votes to nine, and the decision is expected to be formally issued within a month, in order to make its full reasoning known and to be implemented.

After the publication of the decision, it is estimated that, due to its irrevocable nature, a solution will be immediately given to the issue of thousands of objections that have already been brought by borrowers’ lawyers, who had questioned the ability of the so-called servicers to represent the funds in courts and be able to carry out procedural acts, including those related to real estate auctions.

The case had arrived for adjudication before the plenary of the Supreme Court on January 26, in which about 70 senior judicial officials participated, while the prosecutor’s office was represented by the deputy prosecutor of the Supreme Court Panagiotis Panagiotopoulos.

During the hearing of the case, the plenary assembly of the country’s bar associations, chambers and other bodies opposed the prospect of servicers being able to act as parties to the investors, the main argument being that the relevant legislation of 2003 does not leave such leeway.

For their part, however, legal representatives of credit institutions (Eurobank) and other companies argued that a later law of 2015 allows managers to perform procedural actions, including auctions.

The Supreme Court decided in favor of that view, accepting the recommendation of supreme judicial official Kanellas Tzavela, who argued that fund managers based in Greece can conduct auctions in their own name and not as proxies of funds.

After the publication of the decision it is expected that auction procedures will be activated, which until today have been frozen pending the decision.

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