- within Finance and Banking topic(s)
Summary: The amendment of Article 7 of Law 4738/2020 (scope of application) by Article 75 of Law 5043/2023 resolved a major asymmetry in the Greek out-of-court debt settlement mechanism. It now allows individuals with joint and several liability (e.g. directors, board members, or partners) to apply for the restructuring of debts incurred by legal entities that have been dissolved or are in liquidation.
Previously, one of the most significant obstacles for individuals seeking to settle debts owed to the State or social security funds was the inability to include debts from dissolved or liquidating companies in the out-of-court mechanism. These individuals, due to their past positions, bore joint liability but were unable to apply unless the legal entity was revived and remained active until the completion of the restructuring—a condition both impractical and legally burdensome.
This created a paradox: the State actively pursued enforcement against such individuals but did not allow them to restructure those very debts under Law 4738/2020—even if they were willing and able to pay under viable terms. As a result, these persons were effectively trapped in a legal “hostage” situation, unable to rehabilitate their financial status or contribute to public revenue recovery, since the original debtor entity no longer existed.
A further technical barrier involved the registration of the debt. By default, debts are certified solely under the legal entity's tax identification number (TIN), not the individual's, making it impossible to retrieve them through the out-of-court platform. This issue was confirmed by circular ΕΓΔΙΧ 151323 ΕΞ 2021/29-11-2021, which explicitly stated that debts of dissolved entities could not be included unless transferred to the TIN of the individual.
Additionally, prior to the amendment, Article 7(3)(c) of Law 4738/2020 excluded legal entities in dissolution or liquidation from the law's scope. As a result, neither the companies nor the liable individuals could initiate the restructuring process. This changed with the amendment, which now permits restructuring of debts of dissolved or liquidating entities by third parties who are jointly liable for those debts.
Procedure
To initiate the process, the individual's TIN must first be updated with the debts of the legal entity. This is regulated under Ministerial Decision No. 13131 ΕΞ 2024. Before proceeding, the entity must be registered as dissolved or under liquidation in the General Commercial Registry (GEMI) and EFKA, and must have declared cessation of activity to the Independent Authority for Public Revenue (AADE).
Once these steps are completed, the jointly liable individual must request the attribution of the entity's debts to their personal TIN before submitting their application to the out-of-court mechanism.
-
For debts to AADE: the individual must
submit a request via AADE's online platform using their
TAXISnet credentials, accompanied by:
- The company's "Liquidation Commencement Notice" (from GEMI)
- Their own “Individual Modification History” (to prove the period of liability)
Once the request is approved and the TIN updated, the individual may proceed with their application.
- For debts to EFKA: the procedure requires in-person presence at the competent KEOA office. The same supporting documents are needed. EFKA will determine the period of responsibility and transfer the debts accordingly.
After both processes are completed, the individual can create and submit their restructuring application on the platform, ensuring to select the option to include jointly liable debts. If done correctly, the debts will appear in the application and be included in the restructuring.
Multiple Liable Persons for the Same Debt
The out-of-court mechanism will assess the debt based on the financial capacity of each applicant. Thus, when multiple persons are jointly liable, the restructuring plan may vary depending on the financial and asset situation of each, or their additional debts.
Importantly, the legal effects of the restructuring apply not only to the applicant and the legal entity, but also to all third parties who are jointly and severally liable for the included debts.
In particular, Article 4 of Ministerial Decision 13131 ΕΞ 2024 provides that, by way of exception to Article 22(2)(a) of Law 4738/2020, if a restructuring fails, a new application for the same joint liability debts may be submitted by another liable individual who is not excluded from the mechanism.
Conclusion
This reform constitutes a major step forward in institutional logic and fairness. It restores access to debt restructuring for natural persons who bear joint liability but had previously been excluded from the mechanism. At the same time, it offers the public sector a more effective recovery tool—promoting voluntary compliance and establishing a more practical, equitable approach to business debt.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
