Gov’t OKs bill on out-of-court debt settlement

Gov’t OKs bill on out-of-court debt settlement

An Economy Ministry bill for an out-of-court mechanism allowing overindebted companies to settle their arrears to banks and the state foresees it applying for two years, while sources say that the country’s creditors are proposing that it function for no more than a year.

The draft law was approved by the inner cabinet on Wednesday and the mechanism’s duration is one of the issues slated to be discussed next week with the creditors’ representatives in Athens. The ministry has prepared the final draft of the bill, which will be submitted to creditors for approval so that it can be presented to Parliament by the end of the month.

In a statement on Wednesday, the government said “there are no restrictions to what the solutions chosen will entail. The solutions may be multi-year extensions, partial debt write-offs, or other forms of settlement or restructuring of debts.”

The bill provides for the state (tax authorities and social security funds) and the banks to jointly participate in the reduction of arrears of overindebted enterprises provided the latter are deemed sustainable.

There will be a specific process for out-of-court settlements, which is explained in the bill, and the mechanism will be open to all enterprises – big, medium-sized and small – as well as to freelance professionals who have debts they would like to settle. The procedure will be conducted via the website of the ministry’s Special Secretariat for Private Debt Management and applicants will be inspected to ensure they are not strategic defaulters.

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