Did Greece Recover from The Recession?

Greece experienced a long recession that has significantly damaged the business sector. Despite the harsh environment, a lot of efforts have been taken place and the country has made many steps towards its recovery.

Legal expert Serafeim Sotiriadis stated: “In the last years, we have seen crucial changes in the law that will positively impact the business landscape very soon. Investment opportunities have already increased and we foresee many more in the future.”

His firm’s goal is to pave the way for these changes in Greece and to provide clients with world class legal and financial consultation. He speaks more on the recession and Greece’s corporate sphere.


Which are the legal tools a potential investor could make use of when interested in investing in financially distressed companies in Greece?

The global financial crisis had a huge impact on the economic environment in Greece from 2011 and as a result, the business landscape changed dramatically. The consequences of this change brought out the vital need for Greek companies to restructure their debts in order to continue being viable and profitable. Through the restructuring mechanisms available in the Greek law, companies have the opportunity to extend the repayment of their obligations, write off a proportion of their debt and ultimately, in many cases, they get significant refinancing from the banks. Bankruptcy law provides businesses with the legal tools to achieve these goals. The most prominent ones are the “Pre-pack Agreement” and “Company Transfer Agreement” found in articles 106b and 106d of bankruptcy code (BC). Companies can also resort to the “Special Administration” provisions as they are defined in the Law 4307/2014 (articles 68-77). In any case, investors can step into reorganised, restructured and most importantly, viable companies, making a worthy investment at a fair price.

Also known as “Rehabilitation Agreement”, article 106b of Bankruptcy Code gives debtors the opportunity to sit at the table with the creditors and negotiate the future of their companies. Even though creditors used to be strict in the past, the current need to reduce their exposures from the non-performing loans has made them more flexible and eager to agree on favourable outcomes for the debtor provisions, especially in cases where an investor is about to step into the company. For instance, the parties may agree on the alteration of the terms of the debtor’s obligations, the disposal of the debtor’s assets, debt capitalisation, reduction of claims against the debtor, the appointment of a person responsible to supervise the implementation of the terms and many other provisions aiming at the success of the restructuring procedure.

The process begins with the negotiation of the agreement between the debtor, its creditors and the potential investors. The negotiation is followed by the signing of the agreement by creditors representing the qualified majority, namely creditors representing at least the 60% of the aggregate obligations of the debtor in which 40% must be secured. More importantly, a business plan must be drafted by a recognised accounting firm that presents predictions about the viability of the company in the future while the satisfaction of the creditors’ claims must be feasible in the future. The point is that the company does not only restructure its debts, but also reorganises its business’ operating sector, making important changes in the employees and suppliers status quo, in the expenses etc.  The agreement must be ratified by the Greek courts; therefore, a petition must be filed and approved by a court decision which will be in effect erga omnes (even the creditors who did not consent to the restructuring).

Similarly, article 106d of Bankruptcy Code predicts the transfer of the company to a third company, either in whole or in part, and the restructuring of the debts will take place after the transfer. The third company may be either an existing or a newly established company and all the restructuring law provisions accordingly apply in this case as well. In essence, the third company purchases the assets that prefers leaving a part of the old entity behind and restructures the debts transferred alongside these assets. This mechanism turned out to be very popular in Greece in the last two years, especially among foreign investors who mostly seek to acquire a company under a healthy legal environment in case that the exposure of the acquired entity is too large.


What are the advantages?

First, I would like to stress the evolvement of the restructuring law in Greece. The Greek legislator has made crucial reforms in terms of the procedure, as restructurings used to be cumbersome and time-consuming, ultimately discouraging any investment initiative. The new legal environment allows debtors and investors to have an erga omnes court decision in approximately four to six months. The previous regime used to have a long time schedule from the signing to the execution of a deal, but now this is not the case. Other than that, the filing of the petition automatically grants a four month period during which collective and individual, pending or not, enforcement procedures against the debtor’s assets are suspended. This is an important provision reassuring that during this interim period any alteration in the debtor’s assets will not take place, so the investor will not be in fear of buying a different company from what he initially agreed on in the first place.

Furthermore, the Bankruptcy Code predicts that in cases where the debtor received any interim financing, either by banks or investors, from the signing of the agreement until the court approval of the agreement, these claims are ranked and will be satisfied first if the rehabilitation agreement finally fails to be ratified by the court. This is also an important amendment in restructuring law that encourages the potential investors to be involved in the restructuring of the debtor’s business, enhancing the prospects of a successful rehabilitation. In most cases, the agreement predicted that the investor would step into the acquired company long before the court approval making investments for the continuance of the business operation. The law protects these early investments by granting a “privilege” to the investors if the deal eventually collapses.

Also, despite the fact that the future viability of the business is of huge importance for the court to ratify and approve the rehabilitation agreement, and difficult to prove, the competent court may proceed to the ratification without inspecting the viability of the debtor’s business, provided that certain requirements are met, which ensure that all creditors have full knowledge of the agreement and the supporting business plan.

Specifically speaking of the abovementioned article 106d of the Bankruptcy Code, it is very important to keep in mind that all transfers are exempted from any tax, duty or fee payable to the Greek state. However, in this scenario, apart from the assets, there must be provisions for the transfer of all or a part of the debtor’s assets to the third party and provisions of the parallel regulation of any non-transferrable liabilities that they shall either be written off, capitalised or remain as liabilities of the old entity. More importantly, there is no need to submit any certificate clearance or other statement of the debtor when the assets are transferred, because these exemptions take place automatically.


How is the Non-Performing Loans (NPL) market going to grow in Greece in 2019? What are the opportunities?

The Greek NPL Market is considered to be the most promising in Southern Europe, ahead of Italy and Spain within the next upcoming years. The combined non-performing exposures (NPEs) of the four systemic banks in Greece is estimated to be of €105 billion with the largest NPL ratio in the Euro area at 47%. The Greek systemic banks came to an agreement with the ECB Banking Supervision to reduce this exposure by approximately 50% (an amount equal to €43 billion) in the next years. This goal is not going to be reached, unless the banks proceed to NPL sales, which means that a “huge wave” of opportunities in this sector will occur in the next 12 months. As far as we know from banking sources, the Greek Banks will conduct sale processes of loans until December of 2019 with estimated value approximately €80 billion. Greek loan portfolios have already attracted investors, as the profit rate has been initially estimated between 10-15% IRR, a fact that allows us to be more optimistic for the imminent rise of the Greek NPL market.

Regarding the types of assets, it has to be mentioned that the Greek Banks have the intention of making available a variety of assets that may attract different kinds of investors in the market. The most stimulating is considered to be loans that are backed by hard assets such as hospitality-related (e.g. hotels) and real estate loans. Other than that, SMEs, large corporate and consumer (unsecured) loans remain on the top of the list, while residential mortgages alongside shipping loans are expected to gain significant interest from investors. The Banks intend to formulate mixed pools making the portfolios diversified, but sales of particular types assets are still on the table if sound investors’ interest is expressed.

Despite the delays, the Greek Banks have shown their intention to accelerate the processes within 2019 announcing the initiation of several NPL projects so far. In 2018 we witnessed the completion of two projects, namely the “Amoeba” and “Solar” projects that regarded loan transfers and loan servicing agreements respectively. Amoeba project amounted to 2 billion through an auction process that consisted of the NDA signing (first phase), the non-binding offers submission (second phase) and the binding offers submission with the highest bidder undertaking the project loans. Currently, three more NPL projects have already been announced, namely “Jupiter” valued at 800 million by Alpha Bank, “Keros” valued at 700 million by Attica Bank and Amoeba 2 by Piraeus Bank. The future is promising as new projects are expected to come up in the next 12 months and new opportunities will arise for potential investors.


What are the legal complexities clients should take into account from your experience?

Investors that are keen to be involved in this market have to take into consideration various financial and legal issues before making their investment decisions. First of all, they should keep in mind that the Greek NPL market is still at its infancy, meaning that the market participants lack experience as there are no precedents and for this reason, the sellers may appear to be hesitant in the beginning. Therefore, the potential investors should look to establish a trustworthy relationship and demonstrate consistency in the negotiation process. Furthermore, the potential investors should also take into account that after having access to the data, the information, both from economic and legal perspective, is presented in a way that due diligence is absolutely necessary. The data precision is of vital importance, as discrepancies in the content of the information are those that lead to huge divergences in the price estimation of the sale. The most vulnerable consequence is the delay in closing the transaction, which is something that could discourage investors from getting involved in such transactions in the first place.

Lastly, I would like to highlight the complexities that are likely to arise due to the Greek NPL Regulation and Greek Law in general. Speaking of the Regulation, the Greek Parliament has already passed the Law 4354/2015 (articles 1-3), which specifically determines the legal framework for the transfer of non-performing loans posing as a necessary requirement for the approval of any transfer by the Bank of Greece. This might end up being more complex than it sounds and the investors should not consider the approval process as a “typical” one. Also, foreign investors are not usually familiar with civil jurisdictions, especially Greek Law and its particularities should be seriously taken into account (e.g. confidentiality law). The clients should look to acquire specialised legal advice from lawyers that have a deep understanding both in the Greek banking industry and in the investors’ needs.


What are the key elements of your firm’s success?

Our firm deals with financially distressed companies, whose issues are extremely complex when it comes to practice. A corporate lawyer needs to have a set of particular skills to face corporate issues. In our firm, the key element to our success is the combination of our legal expertise and in depth understanding of the economic environment, alongside our experience in the Greek banking sector. These elements make us understand the needs of every client and always promote the best solution in every case.

Apart from that, we have formed a well-trained and trusted team that is always responsive. Our firm encourages every lawyer to take initiative and develop their skills by urging them to take steps forward. The special needs of our clients and the high volume of work demands the existence of such a team and personally, as a managing director, I always try to inspire and convey my experience to the next generation of lawyers.



Serafeim Sotiriadis


Serafeim Sotiriadis and Associates

4, Lykavittou Str., GR-10671 Athens

Tel: +30 2103388812 Fax: +30 3388813




Serafim Sotiriadis, Attorney at Law, the Founder of Serafim Sotiriadis and Associates, is a graduate of Athens Law School and a member of the LAA since 2001. As a specialist in major debt restructuring and insolvency, Sotiriadis frequently lectures on corporate reorganisation and the restructuring of bank loans, having been personally involved in some of the most significant cases to have taken place in Greece. He has extensive experience in bankruptcy processes and extrajudicial loan renegotiation, as well as judicial experience in defending cases related to financial white- collar crimes. He provides international and Greek legal and tax advice to foreign law offices and corporations concerning cross-border buyouts, real estate ownership, investments in listed Greek companies, and the establishment of foreign companies, subsidiaries and branches in Greece. Serafeim also offers assistance with international real estate transactions and acquisitions of “golden visas”.

Serafim Sotiriadis and Associates, considered to be one of the leading law firms in Greece, provides a wide range of legal and business services with a specialty in commercial law, insolvency law and business restructuring and recovery.

Our high-quality and high-tech services, certified by ISO 9001:2008, are provided to both Greek and international clients by our team of highly trained and knowledgeable legal and business advisers with cutting- edge expertise and experience in the field. We are members of the IBA (International Bar Association) and IAG (International Advisory Group), and our informed team members actively participate in seminars, conventions and international gatherings of legal and business advisors.

The cornerstones of our business philosophy are consistency, thoroughness and personal engagement, underlying a commitment to offering our clients personalised and effective integrated solutions that are specific to their particular interests and requirements. This has allowed our team of lawyers, economists, accountants and consultants to achieve significant success, not only in the fields of company and commercial law, but also across our broader expertise in criminal and civil law. Our team members receive continuous training in the latest developments in national and international law.

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