L. 4599/2019: Legal framework for Insolvency Procedures
Amendment of Law 4307/2014 regarding the Special Administration procedure
In the article 34 of Law 4599/2019 (Government Gazette Α' 40/04.03.2019) entitled “Testing for the qualification and conduct of candidate drivers and drivers for obtaining driving licenses and other provisions for driving licenses” (hereinafter “the Law”), the special administration procedure legal framework of Articles 68 et seq. of Law 4307/2014 (Government Gazette A’ 246), is amended for the first time (hereinafter “the Special Administration”). Necessity for Regulation Until now, the duration of the Special Administration was of 12 months, with possibilities of extension, under the strict conditions provided by Law 4307/2014. However, the ever-increasing implementation of Special Administration procedure from 2017 onwards in the Greek Jurisprudence has revealed practical problems, especially due to the status of many of the companies, which are currently under said regime. Indicatively, the relevant time extension and amendments in general will accommodate and contribute to the following:
a) the drafting of an accurate asset’s inventory, which shall be transferred, (e.g. in cases where the previous companies’ management is not cooperative or there is no such organized archive at all), b) the issue of the necessary licenses for the company’s operation and further the transfer of such licenses, c) the clarification of the limits of the administrating powers of the Special Administrator, and d) the transfer of the assets of the company under Special Administration, without the obligation to provide tax and social security clearance certificates.
In particular, pursuant the provisions of article 34 of the Law 4599/2019, Articles 69, 72 and 75 of Law 4307/2014 are amended as follows:
- Paragraph 3 of art. 69 of L. 4307/2014 is amended and the term of the Special Administration procedure along with the scope of the Special Administrator is extended for eighteen (18) months from the publication of the ruling regarding the Special Administration, instead of the 12-month duration of the procedure which was applicable until today. In addition for the first time, a six-month extension can be ordered by the competent Court, i.e the Court of First Instance of the company’s registered seat.
- In art. 72 of L. 4307/2014, a new paragraph 4 is added, according to which the Special Administrator may exchange real estate properties of the company under Special Administration with real estate properties of equal value of third parties, which is determined by an evaluation report of two (2) certified appraisers registered in the relevant registry of the Ministry of Finance.
- In par. 5 of art. 75 of L. 4307/2014, a sub-section is added, according to which a company under Special Administration is exempted from the obligation to provide tax and social security clearance certificates upon the execution of the asset transfer agreement, loan agreements, credit facility agreements and any other kind of financing, as well as for any transaction with the Greek State during the Special Administration.
- The aforementioned amendments also apply to Special Administration procedures, which are already in progress, i.e. to companies that have been entered into the Special Administration regime prior to the publication of the Law.
The above mentioned amendments and additions aim to strengthen the Special Administration regime by facilitating and making even more effective the role of the Special Administrator and the Special Administration’s successful accomplishment, which is necessary, as this procedure is increasingly being utilized by creditors also for the benefit of both the economy and employment.
Said results, are confirmed by the examples of indebted companies, which, through Special Administration, have achieved, or there is a significant effort to be achieved, at the same time: a) the transfer of their assets to trustworthy investors, b) the preservation of a significant number of jobs and c) the satisfaction of creditors’ claims through this process in a more efficient way in comparison with the other insolvency procedures, making Special Administration an important legal tool for the creditors.
While we expect the implementation of these provisions in practice, in order to draw safe conclusions, we can already point out that in any case such amendments are in the right direction for the further harmonization of the Special Administration procedure with the modern market requirements, which is already applied successfully and may be further developed into a radical type of “rehabilitation” for indebted companies.
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