Extrajudicial Compromise

Key questions about extrajudicial debt compromise mechanism:

Who can apply for the extrajudicial mechanism?

  • As long as they are considered eligible and sustainable, all types of businesses (one-person businesses, small or large businesses) can be listed in the extrajudicial mechanism of debt settlement. This means that they need to have a positive use in, at least, one of the three categories, before they file the application. Businesses that had ceased but now resume their activities can also apply for this mechanism. Their debt must be over 20.000 euros.

Which are the prerequisites for a business to apply for extrajudicial settlement?

  • Given that a business is considered sustainable, it can file an application to be listed in the extrajudicial mechanism. It only needs to fulfil one of the following conditions:
  • it must have a debt, from loan or any other cause, to the bank and a 3-month delay in payment by 31/12/2016
  • it must have a debt, from loan any other cause, to the bank settled after 01/07/2016
  • arrears to tax authorities
  • arrears to insurance funds
  • it must have issued drafts that have been stamped
  • There must be orders for payment or court judgements against them, due to outstanding claims by third parties (e.g suppliers etc).

What type of debt can be settled?

  • Any kind of debt to banks, private individuals, as well as debt to public institutions (tax authorities and insurance funds) can be settled.

Can freelancers be listed in the provisions of the extrajudicial mechanism?

  • Freelancers may be listed in the extrajudicial mechanism and settle their debt, only to tax authorities and insurance funds – not banks - and have up to 120 installments. Their debt can be up to 50.000 euros to tax authorities or to insurance funds, meaning up to 100.000 euros in total. In any case, freelancers are also entitled to file an application for «Katseli Law» as long as there are no insolvency proceedings.

How is the debt settled?

  • There are three different methods of debt settlements:
  • Interest rates cuts
  • Extending repayment periods
  • Even debt write-off

How will this agreement be ratified?

  • Once the agreement is reached, contracting parts sign the relevant document – contract on debt restructuring – and proceed with the execution of the agreement. The agreement can also be ratified by the court.
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