Pressure on the economic situation of vulnerable populations enterprises and householdsespecially those that were on the path to recovery from the pandemic and have floating rate loans, the current economic situation is high inflation, higher energy prices and slower economic growth. This is indicated by the commander of the CE Yannis Sturnaras in an interview with K Epiherein, explaining that the situation could be manageable under the base case developed by the Bank of Greece if banks implement sustainable solutions that offer an exit to vulnerable borrowers.

Non-performing private debt, despite the reduction in bad loans achieved banks, remains today at a high level and, according to the Central Bank, is 101.3 billion euros, of which 86.8 billion euros belong to funds and only 14.5 billion euros are in banks. This is debt that has changed hands as a result of the sale of loans, and which, although it has gone off the banks’ balance sheets, is a significant pocket of uncertainty as it keeps a large part of the economy in a stalemate. Out of a total of €101.3 billion, corporate debt is €42.2 billion, households (on housing and consumer loans) €46.7 billion, and another €12.2 billion is the debt of the self-employed.

The settlement of this debt – whether individuals or legal entities – is transferred to management companies, which apply generalized rules depending on the financial situation of the debtor, and a significant part of debt collection is carried out through real estate auctions. According to the management company, about a third of the claims for payment of private debts will fall on the liquidation of assets, that is, on auctions.

Sanitation

The key tool for saving a business with the arrival of an investor under the new bankruptcy law, which essentially came into force at the beginning of 2021, is the consolidation process, which mainly concerns medium and large businesses with debts of more than 10 million euros. Unlike the out-of-court mechanism based on automated decisions, the reorganization process is a complex process, which, however, under the new bankruptcy law has been simplified by limiting the participation of the courts, which only intervene in the stage of approval of the reorganization agreement. To date, about 70 companies have submitted applications, and about 20 of them have approved a reorganization plan, including Halibourgia Hellas, Kallimanis, Fidas, Boutaris, Verteplan, Malamatina and others.

Small business

For small businesses, an out-of-court mechanism process that issues automated debt resolution solutions through a dedicated platform is preferable, but to date, the application process from the point of view of legal entities is not satisfactory for solving the problem of private debt. According to the Special Secretariat for Private Debt, out of a total of €25.3 billion in debt that can be settled out of court, only 26% are debts of legal entities, since the majority of applications come from individuals.

The debts of regulated enterprises amount to 6.6 billion euros, while the debts of candidates for regulation of individuals amount to 18.7 billion euros.