The Insurance Debt Collection Centre provides clarifications on the provisions of the 61 article of the Law number 4559/2018 by which they were amended the articles 2,9 and 15 of the Law number 4469/2017 out-judicial mechanism business debt settlement and other provisions.
The decision in detail:
For the application of the aforementioned provisions we know you the following:
- FIELD OF APPLICATION
Paragraph 1 of the article 61 of the Law number 4559/2018 modified paragraph 2 of article 2 of the Law 4469/2017 limiting the scope of the Law as of now anonymous sports companies don’t have the right subordination In the process of out of court debt settlement.
Therefore with the latest forecast they cannot submit application for inclusion in the out-of-court mechanism. Credit and financial institutions investment service providers and the foreigners branches operating in Greece, Collective Investment Organizations in movables Values, Alternative Investment Organizations, and their managers, Insurance companies, Sports anonymous companies.
Individuals or legal persons who have applied for inclusion in the provisions of the Law number 4307/2014 and Law number 3588/2007 (Bankruptcy Code) unless it exists their valid resignation from these procedures until the date submission of the application in the out-of-court mechanism or for which it has been issued final decision of affiliation in one of the above procedures or the application has been discussed and the issuance of the court decision is pending.
Businesses with work interruption or legal persons who are in the process of being resolved and liquidation unless work resumes natural person or revival of the legal person before submitting the application.
Natural persons or legal entities who have been convicted with irrevocable decision to tax evasion, revenue legitimacy from illegal activities, embezzlement, forgery.
Further, with the modification of the paragraph 21 of the article 15 of the Law number 4469/2017 «Public participation and the of Social Security Institutions» the above debtors who excluded from the field of application of the paragraph 2 of the article 2 of the Law number 4469/2017, as it has been modified, they have the opportunity to apply application when the following are included in their entirety or individually:
- the total debt to be settled is less than twenty thousand euros (20.000€)
- These are sports anonymous companies
- a creditor’s claims are exceeded the 85% of total receivables against the debtor (bilateral negotiations)
- They are natural persons who earn income from business activity, according to the Income Tax Code ( Law ν. 4172/2013), but they don’t have
- OBLIGATORY RULES OF THE DEBT RESTRUCTURING AGREEMENT
As is already known creditors and the debtor can freely formulate the content of the debt restructuring agreement following specific mandatory rules. With the provisions of the paragraphs 2 and 3 of the article 61 of the Law number 4559/2018 cases a ‘and b’ were amended of the paragraph 2 of the article 9 of the Law number 4469/2017 related with the mandatory rule of non-deterioration of the position of creditors, in case of liquidation of the debtors’ assets and co-debtors in the enforcement proceedings based on the article 977 of the Code of Civil Procedure.
More specifically, for the application of the mandatory rules are taken into account the rules for classifying creditor requirements, as they apply at the time of application for inclusion in the debt restructuring process
regardless of the time of enforcement of the seizure or service of the check to be executed. Any surpluses recognized in the Public, on the basis of pre-existing provisions not taken into account.
Additional in accordance with par. 4 of article 61 of law 4559/2017, a paragraph was added at the end of par. 5 of article 15 of law 4469/2017 «Participation of the State and the Social Security Institutions» which stipulates that in accordance with the above mandatory rules, the number and amount of installments of the payment specified in the restructuring agreement for the repayment of debts to the State are determined by criterion:
the monthly ability to repay the debtor
the maximum duration of the setting and
the calculation of the net present value
In the case of private creditors if the regulation as to the lattest has a longer duration than the maximum duration of the setting with regard to the State, that is, ten (10) years as defined in par. 3 of article 15 of law 4469/2017, then the mandatory rules of Article 9 of the same law apply to the net present value of payments carried out during the maximum duration of the regulation with respect to the State.
Please note that not all creditors follow the same repayment period as the maximum repayment period for the State is set at one hundred and twenty (120) installments highest limit, while private creditors are free to decide longer and / or shorter debt repayment period.
With the amendment of the law, the control of the observance of the obligatory rules:
- on the non-deterioration of the position of all creditors and
- of symmetric distribution to all creditors
In any case it will take place on the net present value of the payments of the maximum duration of the contract for the State that is, the first decade of the contract.
Therefore, the amounts and other considerations remaining for distribution, after the priority distribution of amounts and other exchanges, distributed symmetrically to all creditors on the part of their remaining outstanding receivables and the available repayment capacity is divided into terms net present value in proportion to the above outstanding debt among creditors participating in each time period.
- TRANSITIONAL PROVISIONS
In accordance with the provisions of par. 6 of article 61 of law 4559/2018 the above amendments to the mandatory rules of the debt restructuring agreement and par. 5 of article 15 of law 4469/2017 are also applicable to pending applications at the entry into force of the law.
