October 2023 – Suspension of enforcement measures carried out by a Servicer of Receivables

October 2023 – Suspension of enforcement measures carried out by a Servicer of Receivables

Decision No 5797/2023 of the Athens Court of First Instance – Suspension of enforcement by a Servicer of Receivables in the specific form of prohibition to impose a compulsory seizure in the hands of third parties (prohibition of seizure of bank account).

Decision No 5797/2023 of the Athens Single Judge Court of First Instance was issued, suspending the enforcement proceedings which were being pursued against a debtor company on the basis of the contested writ of payment, prohibiting the imposition of compulsory seizure of the company’s bank account.

In particular, it was held that the debtor company is worthy of interim judicial protection by prohibiting the seizure of its bank account, because the validity of its objections filed under Article 933 of the Civil Procedural Code against the writs of payment, was presumed.

It is worth noting that the debtor company had repeatedly tried to reach a settlement agreement regarding its alleged debts, primarly with the banking institution as well as with the Servicer. And while there had been an agreement in principle with the Servicer on a proposal to settle the alleged debts, which even included a voluntary auction of real estate owned by the debtor company, the latter chose, quite unexpectedly, to issue the writs of payment, with the apparent intention to proceed immediately to the imposition of enforcement measures. The Court held that the Servicer had no legitimate interest in seizing the bank account, since it was negotiating the voluntary auction of real estate.

An important element of the case was that the bank account, on which the seizure was prohibited, is crucial for the the company’s business activity. This account is used to pay the salaries of its employees, to pay the company’s lawful obligations towards the greek state (tax, healthcare etc), to pay foreign and domestic suppliers and to, in general, finance the domestic business activity of the company. Its important customer – by far – are public hospitals, which are exclusively supplied by the company with certain medical equipment. Any seizure of that bank account would exclude the company from its financing means and would result in its closure, thus its inability to cover its contractual and legal obligations, amongst which the obligations towards public institutions.

The above granted suspension, gives the defendant the necessary space and time to continue and complete the negotiation process to achieve a settlement of its alleged debts, without being subject to the imposition of a seizure on its main bank account, which would effectively mean the cessation of its operations, with all the ensuing chain reactions caused by such circumstances (“lockout” of the business, loss of jobs, etc.), while at the same time it is an effective condamnation of the abusive practices that Servicers often put to use.