- within Finance and Banking and Criminal Law topic(s)
(republished from Euro2day.gr)
Dialogue at a major Servicer this summer: "-Debtor: We will proceed with submitting a request through the out-of-court mechanism to see if a solution can be found via the platform. -Servicer: Here in the corporate department, we do not accept out-of-court settlement proposals. -Debtor: How is that possible? The law has been passed, we know the government is actively promoting it, and it offers solutions without going to court. How can you pre-judge the outcome? -Servicer: Our investors do not accept repayment periods longer than 3–5 years, and through the out-of-court mechanism, the proposed settlement duration is almost always longer."
This dialogue does not sound strange to those dealing with insolvency and corporate debt restructuring. Thus, we have businesses which, based on their financial data, could support settlement plans of 10–15 years, for example — in line with what the out-of-court algorithm calculates — but the Servicer demands repayment within 3–5 years. It is, after all, widely known that the algorithm's proposal is optional for Servicers (except in cases involving vulnerable and eligible debtors).
In the meantime, the General Secretariat for Financial Sector and Private Debt Management (GSPD) refers to high approval rates of the algorithm's proposals by Servicers in its "Out-of-Court Mechanism Progress Report" of July 2025, but in footnote (b) it notes the following: "For applications with total debt up to €250K." Therefore, Servicers largely accept the platform's proposals only in cases under €250,000 — while for debts exceeding that amount, which mainly concern businesses, no statistics are published, clearly because the approval rates are much lower.
And then comes the second part of the story: The debtor wants to receive a copy of the proposal generated by the out-of-court algorithm based on their financial data, in order to take legal action. Their goal is to bring the matter before an impartial judge who will determine whether the Servicer's refusal is abusive — and whether this behavior has caused harm (e.g. through the accumulation of default interest, since no settlement was accepted).
The debtor requests a copy of the proposal from the General Secretariat (GSPD), but the answer is negative — citing Article 7(7) of Ministerial Decision 77697 EX 2021, which states:"The above settlement solutions shall be disclosed exclusively to participating creditors who are called to evaluate the debtor's application, as well as to the State and Social Security Institutions if involved and to the Special Secretariat for Private Debt Management, excluding any communication or disclosure to any third party, including non-participating financial institutions, the debtor, their spouse or family members..." In simple terms: under this Ministerial Decision, the algorithm's proposal is shared with Servicers but not with the debtor directly concerned.
However, this restriction is not provided for anywhere in the law passed by the Greek Parliament (Law 4738/2020). It was adopted solely by the Administration (i.e. the executive branch), evidently in agreement with the General Secretariat. And why was it adopted? According to the Secretary General herself, in response to a parliamentary question submitted by 11 MPs (Reply to parliamentary question no. 6824/17.9.2024): "An alternative approach would result in a surge of court appeals seeking to impose judicially a solution not accepted by the creditor, with uncertain outcomes — which was one of the major mistakes in the past regarding private debt management, and should not be repeated, as it did not lead to definitive solutions and, in case of rejection, further burdened the debtor with significant interest." (The MPs had asked: "Will the debtor be granted the right to access the proposal and counter-proposal for debt settlement generated by the out-of-court mechanism's algorithm?")
So, while Parliament did not introduce any confidentiality clause when it passed the 2020 law, nor authorized the Administration to do so, the latter has withheld from the debtor essential information about the proposed settlement of their debt — information that is shared with their creditors but not with them. And not for reasons of public interest that could be understood or objectively justified — but in order to prevent them from turning to the courts.
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