Greek gov’t tables new bankruptcy legislation

The Greek finance ministry on Tuesday tabled a new draft bankruptcy bill in Parliament that incorporates all existing debt settlement tools into a single framework and a single process for settling private debt in the country. The draft law also reforms a framework for dealing with financial default and collective action by creditors.

The procedures introduced with the new law are fully harmonised with EU directives and ensure that sustainable enterprises and business people facing economic difficulties will have access to efficient frameworks of preventative restructuring that will allow them to continue to operate. Honest business people will be offered a full write-off of debt and a second chance to continue their activities.

The draft legislation also envisages that individuals will be offered a full write-off of debts within three years after declaring bankruptcy unless they are under investigation for foul play or refuse to cooperate with bankruptcy agencies. This offer could be brought forward, to within a year after bankruptcy, if individuals agree to contribute assets of significant value, i.e. their primary residence. The new framework also simplifies procedures to prevent and avoid insolvency with the creation of an electronic solvency register. It also envisages faster procedures to return productive means to production through auctions.

The new law is based on five elements: 1) preventing insolvency, 2) bankruptcy, 3) strengthening efficiency, monitoring clauses, vulnerable debtors, 4) insolvency managers, 5) common, final and transition rules.