June 2024 – Annulment of Payment Order of the amount €206,120.00

June 2024 – Annulment of Payment Order of the amount €206,120.00

Decision No 364/2024 of the Athens Court of First Instance (Special Procedure for Property Disputes) which annulled: Payment Order for the amount of 206.120,00€ (plus interest), a writ of payment of the amount of 235.206,71€ (plus interest for late payment) and the seizure in all domestic banks imposed by a receivables servicer. At the same time, court costs of the amount of 8.000€ were awarded in favour of our clients.

By decision No. 364/2024 of the Athens Single-Member Court of First Instance (Special Procedure for Property Disputes), two motions were jointly heard: one against the Payment Order issued by the Servicer of Receivables and another against the imposition of compulsory seizure on all bank accounts of our client company and its guarantors—natural persons.

The Court accepted the objections in full, thereby annulling the following:

  1. The Payment Order of the Athens Court of First Instance for the amount of €206,120.00 (plus interest),
  2. The execution order for the amount of €235,206.71 (plus default interest),
  3. The seizure of the bank accounts of our client company and of the guarantors.

Additionally, the Court awarded legal expenses of €8,000 in favor of our clients.

The reason accepted by the Court was the abusive exercise of rights by the Servicer, as it proceeded with the above enforcement actions during ongoing negotiations regarding the settlement of the debt, which had already started with the original creditor bank. The company’s proposals for compromise were inconsistent with the detailed circumstances and conditions outlined in the objection documents.

The Court determined that the debt management company’s actions aimed from the outset at expediting compulsory enforcement measures and forcibly depriving assets, disregarding the ongoing negotiations at three levels: negotiations within the Banking Code of Conduct framework, organized negotiations within the Extrajudicial Debt Settlement Mechanism, and bilateral negotiations.

Regarding the negotiations within the Banking Code of Conduct, it was found that our clients, the debtors, had legally submitted a counterproposal for debt settlement to the bank, which failed to respond as required.

Concerning the Extrajudicial Debt Settlement Mechanism, the original creditor bank had agreed to participate in the process, which had progressed to the appointment of an expert. However, the original creditor bank transferred its claims to a foreign special-purpose vehicle, and their management was assigned to a Servicer Company. This resulted in the rejection of the application due to a formal defect, necessitating resubmission. Nonetheless, in the interim, the Servicer Company notified the termination of the credit agreement, initiating judicial pursuit of the claim.

The Court also noted that our clients continued bilateral communications and negotiations with the debt management company to settle the alleged debt through written correspondence. However, during the same period, and while bilateral communications were ongoing, the Servicer company filed for the issuance of the contested Payment Order and served it to the objectors in May 2022 without any hindrance.

The Court’s detailed reasoning identified that the financial difficulties of the primary debtor company resulted from an event for which it was not responsible—namely, the compulsory haircut of Greek Government Bonds (PSI) as the company conducted business with public hospitals and was paid in such bonds, whose value was forcibly halved.

However, the Court found that the primary debtor had begun to recover to its previous levels, expanded its client base to private healthcare institutions, and was expected to improve its financial situation reliably and not in the long term.

Therefore, it was determined that the servicer company abusively issued the contested Payment Order amid negotiations and under the commercial and overall economic conditions detailed above, solely to proceed with compulsory seizure of the objectors’ assets.