Greece collection profile

Obtaining financial information on domestic companies is generally achievable.
A key parameter is the legal entity of the company. More specifically capital companies (usually medium & large companies) such as SA, LTD & PC are obliged to publish their financial statements on local business registry. In practice, this applies only for the majority of SA companies while only a part of LTD & PC are disclosing financial information.
Contrary, the rest legal forms (usually SMEs) are not obliged to disclose their financial statements.
Additionally, companies that are listed on Athens Stock Exchange or companies that have issued trading bonds, are also obliged to publish detailed financials, in line with the guidelines given by the regulators in the stock / capital market.
Timing of publication of financial information is also an important factor as the financial information is usually disclosed nine to ten months after the completion of the fiscal year. Certainly, not as fast as in the past.
Allianz Trade allocates each company a grade reflecting its creditworthiness and how it conducts business. Grades represent a core of our knowledge and a synthesis of the buyers’ credit risk analysis. Data and information supporting the grade assessment is continuously monitored and gathered by internal departments to offer the most up-to-date information and to support management decisions.

Liability for business debts is determined by legal structures, which are described as follows:

• Businesses which do not require a commercial organization may be operated by one private individual registered as a Sole Trader. Two or more individuals may also decide to share ownership and responsibilities through Partnerships (Omórithmi Etería, OE), in which case the partners are jointly and individually liable for the actions of the other partners (while increasing fundraising capacity). Limited Partnerships (Eterórithmi Etería, EE) may alternatively offer limited liability to some of the partners.
• Incorporated entities may also be relied upon. Limited Liability Companies (Etairia periorismenis efthinis, EPE) are popular because the shareholders are only liable to the company’s debts in relation to their capital contribution. Since 2013, the minimum capital fund of EUR 4,500 is no longer mandatory. A more flexible form of Limited Company (Idiotiki Kefalaiouchiki Etería, IKE) requiring a minimum capital of EUR 1 and allowing for increased flexibility in shareholding and decision making was also introduced in 2012 (Law 4072/2012).
• Larger businesses would rather be set up through Joint-Stock Corporations or Public Limited Companies (Anónimi Etería, AE), for which a minimum capital of EUR 25,000 is required. In this type of company, the shareholders are only liable for the value of their share, while debts may only be recuperated on the company’s assets.
• Often, foreign investors decide to settle in Greece through a Branch entity dependent on the parent company even though it is managed by a local representative who is jointly and severally liable. In this situation, the parent company may be held liable for the Branch‘s activities; therefore, establishing subsidiaries through independent EPE structures is also frequent.

Greece has a Civil Law system inspired by the French and German legal framework. The law is therefore largely codified and the courts are not bound by precedents, even though consistent decisions tend to be used for guideline purposes. Since a reform conducted in 2012, claims below EUR 20,000 fall under the jurisdiction of the Justices of the Peace Tribunals (Eirinodikeio), and claims up to EUR 250,000 are dealt with by Single-Member Courts of First Instance (Monomeles Protodikeio). Claims in excess of this amount are dealt with by Multi-Member Courts of First Instance (Polymeles Protodikeio).

In theory, the transposition of the Recast Directive 2011/7/EU into domestic law would entitle a creditor to charge a flat EUR 40 collection fee when payment is late. In practice, however, it is very uncommon to do so unless a claim is brought to court.

Retention of Title (RoT) provisions are considered under Article 532 of the Greek Civil Code, which allows the parties to retain ownership over goods until the related invoice has been fully paid. In addition, the Greek Civil Code provides a compensation for the loss of ownership when the goods have been transformed by the buyer and cannot be identified anymore.
Although this is not mandatory, creditors may register RoT agreements with a special registry (Statute 2844/2000). In practice, RoT clauses remain rare and enforcement proceedings remain lengthy, but these would nonetheless allow a debtor to recuperate goods as part of the pre-legal or legal action process.

• Sepa bank transfers are among the most popular payment means as they are fast, secured, and supported by an increasingly developed banking network internationally and domestically. Allianz Trade’s worldwide network of risk offices monitors the financial well-being of customers and grants them a specific credit limit up to which clients may trade and claim should something go wrong. Alternatively, Standby Letters of Credit (a bank guarantees the debtor’s credit quality and repayment abilities) are increasingly used as they constitute reliable guarantees.
• Other means of payment used for domestic and international transactions can be checks which constitute interesting guarantees as bad bouncing may lead to penal prosecution, but also bills of exchange. Promissory letters (hyposhetiki epistoli) are similarly used as debt recognition documents coming from the debtor’s bank and affirming that they are committed to pay the debt in time.
  Generally speaking, bank guarantees remain costly. Therefore, requesting down payments is advisable.

Amicable settlement opportunities (including Alternative Dispute Resolution Methods) should always be considered as a strong alternative to formal proceedings since domestic courts, despite being transparent and fairly reliable, tend to be slow. Before starting legal proceedings against a debtor, assessment of assets is important as it allows verification as to whether the company is still active and whether recovery chances are at best. In addition, it is essential to be aware of the debtor’s solvency status: if insolvency proceedings have been initiated, it indeed becomes impossible to enforce a debt.

Legal dunning starts with a registered Demand Letter reminding the debtor of their obligation to pay the principal and the late payment interest (as contractually agreed or taking a legal rate as reference). Should the debtor fail to pay, and provided that the claim is undisputed, the creditor may request a Payment Order (Diataghi Pliromis) before the court of first instance or with the Justices of the Peace. The debtor’s presence is not necessary, but all documents must be translated into Greek in order to be considered. After examination of the request, the court may agree to issue the requested Payment Order. The debtor is given three days to pay the debt (the Payment Order then becomes immediately enforceable) or to file a defence (opposition does not have any suspense effect on the Order), in which case it becomes necessary to commence ordinary legal action. The deadline for filing a defence is 15 working days, if the Payment Order has been issued against a debtor whose residence or registered office is in Greece, and 30 days if the debtor’s residence or registered office is abroad, or their stay is unknown. The Payment Order fast-track procedure usually takes three to four months depending on the courts’ workload and remains the best tool in collecting debt. Such proceedings may also be commenced on the basis of bounced checks (judgment would be obtained in three to five months). When the debtor has assets in other EU Member States, a European Payment Order procedure (facilitating the recovery of undisputed debts under Regulation EC No 1896/2006) may then be triggered. In this case, the creditor may request a domestic court to issue an Order to Pay which would then be enforceable in all EU countries (except Denmark) without exequatur proceedings.
Ordinary legal action (agogi) would usually commence when amicable collection has failed and when the issuance of a Payment Order is not possible.
A lawsuit is filed upon the competent court according to the subject-matter jurisdiction provisions of the Greek Code of Civil Procedure. The jurisdiction depends on the claim (which means that the higher the claim, the higher the court). The parties are obliged to mediate for any claim higher than the amount of 30.000,00 euros, and the mediation begins with the initiative of the claimant. So far, a very few disputes were resolved through mediation.
This specific judicial procedure requires that all evidence is documentary, there are no depositions or cross-examinations of the witnesses, unless requested by the judge in exceptional cases. The proof consists of pleadings, supplementary pleadings, affidavits, and any other form of written statements, which are filed 100 days subsequent to the issue of the claim.
After a period of 1 ½ year, a hearing will take place where the court will confirm that the procedure is completed and that a judgment is expected. A ruling shall be issued after a period of 6-10 months of the hearing.
In any case, being represented by a local attorney is mandatory.

As described above, Ordinary legal action is based exclusively on the documentation provided; therefore, it is crucial to receive complete documentation supporting the claim as soon as possible. All the documents have to be submitted in their original form (or an official copy) and documents in a foreign language must be accompanied by an official translation. The necessary documents are as follows:

• Original unpaid invoices or the unpaid bill of exchange or the unpaid checks (or certified copies)
• Original delivery notes (CMR, Bill of Lading...) duly signed by the buyer or certified copies
• The orders sent by the buyer
• A certified copy of the pages of the creditor’s accountancy book where due invoices are listed (or bills of exchange or the check)
• Any other contract or essential communication between creditor and debtor
• A proxy signed by the creditor is necessary depending on the specific process or phase of the case
  

Furthermore, since the oral debate on the hearing date has been abolished and replaced by a written procedure, the testimony of witnesses (five maximum during the submission of all evidence until the closure of the case) must be provided by affidavit, usually stated before a Notary Public. In case the witness resides abroad, the procedure for receipt of the affidavit takes place at the appropriate consulate, following all legitimate publicity procedures and deadlines.

Commercial claims must be brought within five years, starting from the original due date. Unfair competition claims must be brought within a year and a half starting from the knowledge of the event. Moreover, compensation for illegal actions can be claimed within five years, starting from the illegal event. Beyond these time limitations, legal action may not be granted.

Provisional measures may help to preserve the creditor’s interests pending a final and enforceable judgment. The courts may help prevent irreparable harm (freezing injunctions, protective injunctions, mandatory injunctions, attachment orders to preserve assets, etc.). In case of a particular emergency, the court may also take provisional measures ex parte (without the presence of both parties).
The measure is justified by the fact that during the interim period the debtor may lose ownership of his/her assets, or he/she may try to damage them. The risk must be imminent for such petition to be approved along with other crucial facts such as that,
i) the respondent has accumulated a lot of debt from different sources,
ii) he/she is trying to transfer, disposes, or move his/her assets and that
iii) a claim has already arisen.
A petition is issued upon the competent court where the procedure is a combination of oral procedure and filing pleadings that state the circumstances establishing the right to seize the debtor’s assets.
In practice, requesting such measures is considered to be very aggressive and would exercise strong pressure upon the debtor, thus possibly leading to a settlement.

The parties are entitled by law to lodge an appeal without any court authorization required, therefore appeals are nearly systematic. In the meantime, interest is calculated so the creditor would be entitled to a larger amount at the end of the process, but this furthers procedural delays and costs. Appeal requests must be filed within 30 days from notification to the parties. The courts then reconsider the decision rendered in first instance, on factual and legal grounds.
Although rare in commercial debt disputes, in case of a dispute over a legal issue, the defeated party is entitled to appeal to the Supreme Court. If the appeal is accepted, the Supreme Court will command the case to be brought back in front of the Appeal Court in order to be discussed once more. In practice, after the Supreme Court judgement all parties settle the issue accordingly with no further delay.
Enforcing court decisions
Enforcement may commence once a judgment is final (i.e. if no appeal is lodged within one month). If the debtor fails to satisfy the judgment, the latter is enforceable directly through the attachment of the debtor’s assets.
Although enforcement may be immediate, the process may be costly and time consuming depending on whether the debtor’s assets can be identified. Furthermore, the debtor may object to the enforcement procedure when appeal proceedings are unsuccessful or when the claim’s value is allegedly wrong, which may generate further delays. It is thus preferable to choose garnishment proceedings especially on debtor’s bank accounts as this action is less expensive and more efficient.

The timescale to obtain a court decision varies and depends on the procedure, on the tribunal and on the context of the file. Obtaining a fast-track Payment Order may require three to five months. Ordinary legal proceedings take much longer – even though the timescale has been considerably reduced after the amendments to the Code of Civil Procedure – with the current required time to receive a first instance decision as approximately one year. Domestic courts would not consider claims involving a foreign party differently from those involving domestic parties. However, some delays may be expected when a foreign party is involved, especially if documents must be translated.

The courts normally award costs to the defeated party, naming the exact amount in the decision. Cost calculations are left to the court’s discretion but are not based on the invoices or the successful party’s estimates. Cost awards are not systematic and the courts typically reject them when it is found that use of the judicial institutions was legitimate and necessary. Court fees would be charged to the creditor, but their amount would depend on the procedure and on the value of the case. All types of agreements are relied upon in practice, for example: a lawyer can pay all judicial costs and receive a percentage of the award upon success (usually 20% of the amount), another would ask for the judicial costs and some fixed fees no matter the final result of the case, another can apply charges per work hours (depending on his seniority), etc.

When obtaining a Payment Order is not possible due to the claim being disputed, arbitration is an Alternative Dispute Resolution method which is very common in Greece, especially when a case involves technical disputes or in large and sensitive deals as arbitration provides confidentiality. It should, however, be noted that an arbitration clause has to be very detailed in order for the defeated party not to have the opportunity to override the arbitration decision through civil procedure.
On the other hand, Law 3898/2010 on Mediation in Civil and Commercial Disputes (which transposed Directive 2008/52/EC) allows the parties to decide to make use of mediation at any stage, but this method is still not commonly relied upon.
Seeking legal advice on these subject matters is therefore important.

Alternatively, when obtaining a Payment Order is impossible and provided that the case is complex and important amounts are at stake, obtaining and enforcing a foreign decision may be a viable alternative (although it is rarely used in relation to debt collection). This is because Greece is a signatory to the Rome I Regulation on the law applicable to contractual obligations, which stipulates that the parties to a contract may, by mutual agreement, choose the law applicable to this contract, and select the court that will have jurisdiction over disputes. Therefore, the parties may alternatively agree to solve their business disputes in a foreign forum (i.e. under a foreign law or before a foreign court) as Greek courts generally enforce foreign jurisdiction agreements.
It is essential that the agreement be characterized by an international connection (for example, one party has elected domicile in another country, or the place of execution is located abroad), and that a jurisdiction clause is specifically drafted for this purpose.

Various circumstances may apply when it comes to enforcing a foreign judgment. On the one hand, decisions rendered in an EU country would benefit from particularly advantageous enforcement conditions. Apart from EU Payment Orders which are normally enforceable directly in domestic courts, the two main methods of enforcing an EU judgment in Greece are by the use of a European Enforcement Order (EEO, under Regulation EC No. 805/2004) when the claim is undisputed, or by registering the judgment under the provisions of the Brussels I Regulation (44/2001).
If the judgment qualifies as an uncontested claim, it can be enforced directly (i.e. without registration) by use of an EEO provided that the debtor has identified assets in the country. A European Small Claims Procedure (Regulation EC 861/2007) aiming at eliminating intermediate steps may similarly be relied upon while enforcing decisions up to EUR 2,000.
If the claim is disputed, the procedure for registering an EU judgment with domestic courts is relatively simple. The judgment holder must apply to the relevant court for the judgment to be registered and provide the court with, among other documents, an authenticated copy of the judgment, a certified translation of the judgment and, if interest is claimed, a statement confirming the amount and rate of interest at the date of the application and going forward. Once the judgment has been registered, it can be enforced as if it were issued by domestic courts (according to the Recast Regulation EC 1215/2012, such an exequatur procedure is no longer required from January 2015).
On the other hand, judgments rendered in foreign countries outside the EU would be automatically recognized and enforced according to reciprocal enforcement treaties. In the absence of reciprocal arrangements, exequatur proceedings would take place (Article 323, 780 of the Code of Civil Procedure): the court would verify that (i) the foreign decision is final and enforceable in the issuing jurisdiction and that it does not contradict a decision previously rendered by a Greek tribunal, (ii) the defeated party benefited from a due process of law, and (iii) the judgment is not contrary to public policy and morality.
Request for enforcement of foreign judgments must be brought to the Single Member court of first instance, which in certain occasions may recognize only part of a judgment and alter damage awards.
Greece is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, therefore its domestic courts ought to recognize and enforce awards rendered through international arbitration proceedings.

Law 4738/2020 (the Insolvency Code) was passed in October 2020, transposing European Directive 2019/1023 and replacing previous insolvency laws. The Law entered into force in two steps in March and June 2021, in order to rectify deficiencies of the previously applicable provisions, by introducing a comprehensive legal framework partly intended to prevent insolvency and partly intended to address actual or forthcoming insolvency, for all categories of debtors (businesses, independent professionals and households).
The Insolvency Code has also introduced an Electronic Solvency Register, through which all announcements, creditors’ communications and registrations of procedural actions shall be realized. All other means of bankruptcy registration, monitoring and publication, except filings with the General Commercial Registry, are abolished. This tool ensures that creditors will have timely access to information on such proceedings.

Major digital innovations have been introduced with the new Insolvency Law such as:

• An online early warning platform supervised by the Special Secretariat of Private Debt Management of Ministry of Finance which includes electronic alert mechanisms and free advisory services for individuals and entities that present a medium or high risk of insolvency.
• An online platform to apply to the out-of-court debt settlement mechanism, for both individuals and legal entities. This mechanism permits to debtors who owe exclusively to financial institutions, to the State and to Social Security Funds to reach, via an online process, a haircut or a debt rescheduling

The rehabilitation procedure is a pre-bankruptcy collective procedure intended to preserve, restructure and rehabilitate the debtor's business through the ratification of a rehabilitation agreement, provided that the rehabilitation agreement meets the no worse-off test for the creditors as compared to the rights and recoveries of each creditor in the event of the debtor's insolvency.
The application to the Court for ratification of a rehabilitation agreement is submitted by a debtor based on the likelihood of insolvency. The competent court is the Multi-Member Court of First Instance of the place where the debtor has the centre of its main interests. The Agreement has to be approved by at least 50% of secured creditors and all other creditors.
Creditors representing the above percentages of secured claims and other claims may also apply for the ratification of a rehabilitation agreement concluded between the creditors only and without the consent of the debtor if, at the time the rehabilitation agreement was concluded between the creditors, the debtor had already ceased payments.
The application must be supported by a copy of the signed rehabilitation agreement and an expert report confirming the viability of the business plan.
During this procedure, all individual and collective enforcement actions of creditors are stayed automatically for a period of four months.
The hearing of the application for the ratification of the rehabilitation agreement is set no later than two months after filing.
Once ratified by the court, the rehabilitation agreement becomes fully binding on the debtor and on all creditors whose claims are dealt with in the rehabilitation agreement, including those who did not agree to it, with respect to claims that came into existence before the date of issue of the ratification judgement.
The Court may order the stay of individual creditor enforcement following ratification of the agreement for a specified period, such stay not being binding on dissenting creditors beyond three months after ratification of the agreement.
The court's judgment ratifying the rehabilitation agreement is only subject to third-party opposition, a remedy available to persons who are not parties to the proceedings.
The court's judgment denying ratification is subject to appeal by a party to the proceedings.
The court judgment ratifying or denying ratification of a rehabilitation agreement must be published, without undue delay, with the General Commercial Registry and Electronic Solvency Register, on application of the debtor or any creditor.

Besides the ordinary bankruptcy proceeding, the New Insolvency Code has introduced a simplified bankruptcy in respect of debtors qualifying as very small entities (meeting 2 of the following criteria: max. €350,000 in total assets, or €700,000 in net amount of turnover, or an average of ten employees).
This simplified procedure is carried out before the Magistrates’ Court and the petition is submitted online and accepted automatically by the Court if unopposed for a 30-day period after filing.  
For the ordinary bankruptcy, the competent court is the Multi-Member Court of First Instance.
The petition can be submitted by a creditor, the debtor or the attorney general within 30 days for the cessation of payments.
Debtor is deemed to have ceased payments when at least 40% (60% for small entities) of its debts towards the State, Social Security bodies or financial institutions exceed €30,000 and is due for at least 6 months.
A judgment of the bankruptcy court declaring bankruptcy sets the date of cessation of payments and appoints the bankruptcy officer who will be responsible for the administration of the debtor for the purposes of liquidating and distributing the proceeds of liquidation to the creditors, in accordance with their respective rights of priority.
If the bankruptcy court concludes that the liquidation of the debtor's assets as a whole (or the liquidation of selected operational groups of assets of the debtor) is likely to increase recoveries by creditors, the judgment of the bankruptcy court declaring bankruptcy will also provide for liquidation.
The creditors have 3 months to lodge their claim and the liquidation procedure (e-auction) starts in parallel with the verification of claims following the inventory. However, liquidation proceeds are distributed to creditors once the verification of claims is completed. Objections to the verification can be raised at each of these stages.

Priority rules apply while distributing the proceeds to the creditors. The Hellenic Civil Procedural Code provides the range of priority rules and allows various classes of creditors (secured creditors, preferential creditors, unsecured creditors and subordinated creditors).
However, the new Insolvency Code has added two cases of senior general privileges for claims generated within the context of the rehabilitation procedure aiming to the continuation or preservation of the debtor’s business: claims from (a) financing facilities, and (b) the provision of goods or services. Their full repayment is a prerequisite to the allocation of any proceeds to other claims pursuant to Article 977 of the Hellenic Civil Procedural Code.
RoT holders would not benefit from a particular priority over the other creditors, however the goods protected under the RoT would not be included into the liquidated property and would be returned to the owner provided they can be identified.

Certain acts carried out by the debtor during the suspect period (i.e., the period commencing on the date of cessation of payments and ending on the date of the declaration of bankruptcy by the court) are subject to compulsory rescission by the bankruptcy officer.
Exceptionally, certain transactions may be vulnerable even if concluded earlier than the set date of cessation of payments. According to the Insolvency Code, acts of the debtor concluded within the five years immediately prior to the declaration of bankruptcy are subject to rescission, if the debtor intended the act to operate to the detriment of its creditors in general or to benefit certain creditors to the detriment of other creditors, and the relevant party was, at the time of the act, aware of the debtor's intention.

Prior to the New Insolvency Code, insolvency proceedings could take several years, in most of the cases over 10 years to be completed and usually with very poor results. The new Law sets clear timeframe for the completion of insolvency proceedings and aiming at reducing considerably the length of such procedure. For small scales bankruptcies, the simplified procedure has to be completed within 12 months while for the ordinary bankruptcy procedure, a maximum length of 5 years has been defined with an automatic termination even if the proceedings have not been finalized.

• A proxy signed by the creditor
• Original unpaid invoices or the unpaid bill of exchange or the unpaid check (or certified copies)
• Original delivery notes (CMR, Bill of Lading, etc.) duly signed by the buyer or certified copies
• Orders sent by the buyer
• A certified copy of the creditor’s accountancy book where the invoices due are listed (or the bill of exchange or the check)
• Any other contract or essential communication between creditor and debtor