May 2023 – Issuance of Provisional Orders by the Athens Court of First Instance regarding the suspension of enforcement of payment orders by a Servicer (law 4354/2015), specifically prohibiting the garnishee order (seizure of funds in a bank account held by the bank – third party).

Provisional Orders were issued by the presiding Judge of the Court of First Instance of Athens, suspending the enforcement proceedings that were being expedited against the plaintiff company – our client – based on the challenged orders for payment. Specifically, the garnishee order, particularly from the bank account of our principal held by a bank, was prohibited.

In particular, it was ruled that the execution against the plaintiff company – our principal – is deserving of provisional judicial protection (suspension of the enforcement proceedings – prohibition of compulsory seizure of the bank account), as the validity of the filed order for payment, pursuant to Article 933 of the Code of Civil Procedure, was reasonably alleged.

Reasons that were raised and led to the presumption of the validity of the objection were:

a) Ambiguity of the contested orders and lack of authorization of the Servicer company to carry out enforcement measures against our client, due to the fact that the identity and exact amount of the alleged transferred claims, which the bank is claimed to hold against our client, were not proven in writing, as the Law demands.

b) The existence of (multiple) procedural irregularities in the expedited enforcement process [violation of Article 925 of the Code of Civil Procedure regarding the obligation to communicate the necessary authorization documents (in their complete text) of the SPV acquiring company as a special successor of the bank and the Servicer company as the alleged servicer of the disputed claims, in lawfully certified copies].

c) The abusive manner in which the expediting the enforcement party chose to exercise its otherwise legal right.

It is worth noting that the party represented by our firm, had repeatedly attempted to reach an out of court settlement of the alleged debts, initially with the banking institution and subsequently with the SPV acquiring company and the Servicer company. Although there was a preliminary agreement with the claims management company for a proposed settlement of the alleged debts, which even included voluntary auctioning of properties owned by the debtor company, and this proposal was formulated upon the urging of the Servicer company and accepted by the debtor company, the opposing party suddenly chose, just a few days before the national elections and during a period of suspension of regular court operations, to submit the disputed order for payment, with an apparent intention to proceed immediately with enforcement measures against our client, specifically imposing a seizure on their main bank account, the uninterrupted functioning of which is critical and necessary for the smooth operation of the business and the fulfillment of its daily transactional needs (product sales, salary payment, tax and insurance obligations, etc.).

Despite the extremely limited/tight timeframe and the disrupted functioning of the courts due to the national elections, it was possible to substantiate a solid defense framework that, in the first instance, prevented the inevitable, namely the seizure of the main bank account that serves the daily needs of the debtor company – our client.

At this point, it is crucial to highlight the following extremely significant elements that apply to each relevant case; Firstly, a necessary and prerequisite element for the ultimately granted suspension of the enforcement proceedings was the timely and well grounded, under extremely adverse timing conditions (especially in this case due to national elections), filling of the petition for annulment of the enforceable payment orders. Secondly, the aforementioned suspension of execution of the enforceable payment orders was achieved in a timely manner, i.e., before the imposition of third-party garnishment. This last element is particularly important, both for legal entities and natural persons alike, since once a bank account is garnished by a third party, even if a suspension of execution is ultimately granted, the amount seized by the bank as a third party is not attributed back to the beneficiary. Consequently, the beneficiary may potentially be deprived of a significant asset until the validity of the objection is determined, a decision that may be issued after an exceptionally long time. As evident, especially in the case of business and commercial companies, such an event can prove to be fatal to the survival of the business.

The above-mentioned granted suspension of garnishment on the main bank account of the plaintiff company – as per our instructions – provides the necessary space and time for negotiation to continue and conclude the negotiation process for the settlement of the alleged debts owed by the acquiring claims company, without being under the threat of garnishment on the main bank account. This would essentially mean the cessation of its operation, with all the subsequent chain reactions that such a development would cause (closure of the business, job losses, etc.). Simultaneously, it serves as a tangible condemnation of the abusive practices frequently employed by claims management companies against their counterparties.