The problem

The period of the pandemic and this period of inexactness we are experiencing have led thousands of businesses and professionals to accumulated debts to the state and insurance funds.

One of the most serious consequences of these debts is the imposition of persecutory measures against the debtor, one of the most common of which is the seizure of bank accounts.

The consequences

For a professional or a business, the freezing of the bank accounts with which it pays and collects, apart from leading to a loss of reputation among its customers and suppliers, can lead to financial suffocation and serious liquidity problems, with the risk of the business being forced to close down.

In fact, the debtor suddenly learns of the seizure of the accounts when he visits the Bank, as the State and the Insurance Funds do not notify him of the decision of seizure.

The Solution

Here, the new Extra-Judicial Mechanism(see what it is here) can help in a realistic way.

The new Extra-Judicial Mechanism acts proactively and can prevent the imposition of a seizure on the debtor’s bank accounts, as from the submission of the application on the online platform until the completion of the procedure, the debtor enjoys full legal protection (unless an auction has already been scheduled).

But what happens if a seizure has already been imposed on bank accounts?

The Law of the Extra-Judicial Mechanism (Law 4738/2022) clearly provides that the submission of the application suspends the continuation of the pursuit of claims, movable and immovable assets (Article 18).

After the completion of the Out-of-Court Mechanism procedure (i.e. the expiry of 2 months from the submission of the application on the online platform), does legal protection continue?

In the event that the Out-of-Court Mechanism procedure results in a settlement, then from the date of the approval of the restructuring agreement, the following applies with regard to the State and the insurance funds (Article 23).

• “the taking of enforcement measures and the continuation of the enforcement procedure on claims, movable and immovable property against the debtor are suspended. This suspension shall not apply to instalments due under the contract’,
• “the criminal prosecution for the offence of Article 25 of Law No. 1882/1990 (A’ 43) and the execution of the sentence imposed in accordance with this Article shall be suspended or, if it has begun, its execution shall be discontinued’.
• “during the period of validity of the restructuring agreement and provided that:

(a) at least the first instalment of the arrangement under the arrangement has been paid,

(b) the debts not covered by the contract have been paid or settled in a lawful manner, with suspension of collection or arrangement for payment in instalments; and

c) the prescribed income tax and value added tax returns and the prescribed Analytical Periodic Declaration (A.P.D.) have been submitted within three (3) months from the expiry of the deadline for their submission, at the request of the debtor, the Tax Administration shall decide that the seizures imposed in the hands of third parties against the debtor do not cover future claims. Seizures in the hands of third parties, which have been imposed exclusively on debts subject to the contract, shall be lifted at the request of the debtor, provided that at least seventy-five percent (75%) of the total amount due to the State under the contract has been paid. In the cases referred to in the above subparagraphs, amounts paid to the State shall not be refunded.

The conclusion

The Extra-Judicial Mechanism can prove to be, among other things, a valuable tool for the legal protection of debtors against their creditors.

The example of the seizure of bank accounts of the self-employed and the business is typical.

What is the alternative to the Out-of-Court Mechanism tool?

The direct arrangement through the Accountant of these debts, in 12 instalments (!) which for most debtors, is an unworkable scenario.

What can I do?

Get responsible advice from certified advisors in the Out-of-Court Mechanism process for your case.

Why us?

Because we are a multi-scientific team of experienced executives, and we have “run” dozens of applications with the New Extrajudicial Mechanism, with high success rates, especially in Public Sector and Insurance Fund debts.

Contact us now, for your case.