Bankruptcy law set for overhaul?

Bankruptcy law set for overhaul?

Entrepreneurs will be relieved of their debts within three years of declaring bankruptcy, according to the main change the Justice Ministry is thinking about bringing into law.

That provision will concern all taxpayers with a professional capacity in the business and aims to offer entrepreneurs who have failed in a business activity a second chance in the field.

Sources say that this is the main proposal by a committee set up by the Justice Ministry for the reform of the bankruptcy code and will be combined with other changes in the pre-bankruptcy procedure.

The current provision regarding debt write-offs concerns relief after 10 years, under certain conditions. It usually comes after the completion of the bankruptcy procedure, which can reach up to 15 or 20 years. In these cases bankruptcy entails the exclusion of the entrepreneurs from involvement in any other business activity, being registered on the list of bad debtors in the Teiresias credit profile database and with consequences such as not being able to have social security or tax clearance statements issued, thereby extinguishing any hope of a new start.

The new clause will be based on a European directive that encourages entrepreneurs to follow the formal bankruptcy process, which despite the long economic crisis in Greece and the shutdown of thousands of companies has remained all but out of use.

Kathimerini understands that among the other changes to be introduced to the law by the end of September will be the compulsory transformation of debts to share capital, and the undertaking of the management by creditors even without the consent of the shareholders, along with an expansion of the system of insolvency managers, so that this role will not only be undertaken by lawyers but also by other professionals such as certified accountants.

The changes to the bankruptcy code will be combined with the new law on the arrangement of debts companies owe to the state and to banks, promoting the streamlining of companies.

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