Greece updates out-of-court settlement mechanism rules

New regulations for the out-of-court settlement mechanism in Greece will take effect on September 21, targeting both individuals and professionals. A primary change is the reduction of the minimum total debt threshold required to enter the mechanism, dropping from 10,000 euros to 5,000 euros. This adjustment is intended to allow a larger number of debtors, particularly small business owners and households with smaller debts, to access debt restructuring.

The new framework places significant emphasis on protecting the primary residence of the debtor. Under a restructuring agreement, a debtor can choose to protect their home, potentially allowing for the sale of other assets to satisfy creditors instead. As long as the debtor adheres to the repayment agreement, creditors are prohibited from pursuing compulsory enforcement measures against the primary residence.

Additionally, a special six-month window starting September 21 will allow certain debtors to re-apply for the mechanism before the standard 12-month period has elapsed. Those currently maintaining a settlement can re-apply if they demonstrate a financial deterioration of at least 20%. Those whose previous settlements were canceled, such as due to missing more than three installments, are also granted the opportunity to re-apply during this period.