August 2023 – Suspension of auction procedure

August 2023 – Suspension of auction procedure

In May 2022, the opposing party initiated the seizure of five properties owned by our principals. The usufruct of these properties is held by the father-debtor, acting as a guarantor in the disputed debt agreements, while the bare ownership belongs to his daughter, who is a third – person, mortgage debtor (i.e., not personally involved in the said agreements except for specific properties with a mortgage). Despite various misdemeanors burdening the legal enforcement proceedings, the Court of First Instance annulled partially the seizure report, specifically regarding the daughter’s non-mortgaged real estate.

With an auction scheduled for mid-July, an appeal was filed against the Court of First Instance’s decision. The suspension of the enforcement proceedings (i.e. the scheduled auction) was also requested, invoking Article 938(2) of the Greek Code of Civil Procedure. Additionally, we sought a Temporary Order/Note for the suspension of the auction under Article 938(4) of the same Code.

Under the revised Article 938, decisions on both the appeal (ordinary procedure) and the suspension request (interim measures procedure) are typically issued simultaneously. This means that the auction might have already occurred by the time the decisions are issued. Thus, the most viable recourse for the debtor is obtaining a Temporary Order/Note to suspend the enforcement process, to halt the completion of the auction, so as to not lose their property.

On July 13, 2023, the Court of Appeal of Piraeus granted the Temporary Order/Note in favor of our principal, suspending the auction of the disputed properties.

The Temporary Order/Note reads as follows: “Following the examination of attorneys’ arguments, sworn witness testimony, and submitted documents from both parties, the request for a temporary order is granted. A Temporary Order is issued in accordance with Article 938(2) and (4) of the Greek Code of Civil Procedure. This order temporarily suspends the auction of real estate (whether it concerns property, usufruct or bare ownership rights) scheduled for …-7.2023, along with any enforcement proceedings, pending a decision on the appeal before this Court. The grounds for appeal mainly concern the validity of the third, fourth, fifth, and sixteenth grounds of appeal, and due to the risk of irreparable damage to the applicants (…)”

It’s important to highlight the anticipated grounds of appeal that the Court presumes to be valid. These include:

  1. The third ground questions the legitimacy of the documents required for notification under Article 925 of the Greek Code of Civil Procedure. The opposing party failed to provide proper legal validation for these documents, casting doubt on their credibility at the time the enforcement proceeding took place.
  2. The fourth ground addresses the opposing party’s conduct as abusive. The appellants made genuine efforts to settle their debts amicably (and mutually beneficial), while the opposing party ignored their proposals and accelerated legal enforcement even against parties not originally involved in the debt agreements.
  3. The fifth ground focuses on the invalidity of the order for payment/execution. It highlights the legal framework that prevents the prescript from being personally directed against a non-debtor third owner of mortgaged real estate.
  4. The sixteenth ground argues that the Court of First Instance misunderstood the legislator’s intent to communicate the seizure to all creditors to encourage participation in the auction. This was erroneously interpreted, resulting in the rejection of the debtor’s objection that a debtor was not notified about the upcoming auction.

The Court acknowledged the potential validity of these grounds and emphasized on the potential irreparable damage to the appellants if they lose their properties without a proper judgment on the legality of the enforcement procedure. Even if the appellants prevail in the Court of Appeal, they might not be able to fully restore their situation without costly and time-consuming legal action.

Thus, the auction was suspended.