Legal Insight
March 2024
Christina Kapourani, MSc (mult.), Pgcert, PhD Candidate
Abstract – Introduction: In cases where the debtor of a monetary claim has not managed or sought to prevent the auction of their assets (particularly real estate), they have the right, even at the last moment, to intervene in the distribution process of the auction to their creditors, checking the correctness of it. The debtor can specifically exercise the objection of Article 979 paragraph 2 of the Code of Civil Procedure against the creditor ranking table drafted by the notary, demanding the exclusion of a wrongly ranked creditor with the aim of a) either being allocated any "surplus" from the auction, or b) having another creditor (who has a real and legally announced claim) ranked in place of the excluded one, with the consequent release of the debtor from a corresponding tangible debt (debt reduction). In this paper, we will attempt to briefly present this right of the debtor by specifying the conditions and consequences of its exercise. Specifically:
I. Legislative provision - Procedure after the completion of the auction: After the completion of the auction and the deposition of the auction to the executive process officer (notary), if the amount paid by the highest bidder does not cover the total claims of the announced creditors (announcements are made within a deadline of 15 days from the conduct of the auction, as specifically stated in Article 972 of the Code of Civil Procedure) and the prosecuting party, a creditor ranking table is drafted. The content of the table essentially determines the amount to be distributed to each creditor according to and with the privilege that each one has (e.g., special privilege: for creditors with prenotation/mortgage, general legal privilege: for creditors such as the state, insurance organizations, or claims from dependent employment, etc., or no privilege: for handwritten or unsecured creditors, e.g., creditors maintaining, for example, a claim from a contract of work with the debtor without further security on the debtor's asset). After drafting the table, as above, the notary notifies a written invitation to the prosecuting party (the creditor who mobilizes the execution and has imposed the seizure), to all announced creditors as well as to the debtor - for whom the execution is carried out, to be informed of it. Within a deadline of twelve (12) days from the above notification, anyone who has a "legal interest," according to the law's formulation in Article 979 paragraph 2 of the Code of Civil Procedure, can challenge the ranking table with an objection.
II. The issue of "legal interest" - When is the debtor entitled, in essence, to object against the creditor ranking table?: The law does not specify the persons who have the right to challenge the creditor ranking table. However, from the notary's obligation to notify the content to the prosecuting party, the other announced creditors, and naturally, to the debtor against whom the auction took place, it is inferred that the debtor is, in any case, among the persons entitled to challenge the table and request the modification or exclusion of claims that are wrongly ranked (because, for example, the contentious claims were announced irregularly with a privilege that does not exist or were announced as unsecured although there is a relevant special privilege, are non-existent, their amount is disputed, the size of their privilege, are statute-barred, have been amortized, are claimed abusively, etc. Particularly, regarding substantial deficiencies or deficiencies of the title of the disputed claim - these are challenged to the extent that there is no final judicial decision (res judicata) on it, which, in any case, would operate "subjectively" between, that is, the involved litigants and would not bind the challenger, if they were not part of the said trial).
Especially regarding the debtor and the possibility to challenge the ranking, it was supported that the latter has a legal interest in challenging the table, only when, from the exclusion of a wrongly ranked claim, a surplus from the auction remains for him - only, that is, if he can request the allocation of a monetary amount to him - (See Court of Appeal of Thessaloniki 505/2001 according to which "the debtor for whom the execution is carried out only has a legal interest in exercising the objection of Article 979 of the Code of Civil Procedure, when he claims that, with the exclusion of the objection by the debtor from the ranking process, a balance remains from the auction, which is intended to be collected by him. Therefore, there is no legal interest when the debtor for whom the execution is carried out seeks the exclusion of the creditor of the objection, in order to rank another creditor in their place", the same was ruled by the Court of Appeal of Patras 1027/2003).
However, based on recent and more correct jurisprudence (as well as theoretical acceptance: See Gessiou – Faltsi P., Law of Enforcement, IIa/ Special part, 3rd edition, page 842-843, similarly Vathrakokoilis A.- Plagakos G., The ranking table and the objection against it, page 99, similarly Kerameus K. – Kondylis D. – Nikas N., Interpretation of the Code of Civil Procedure, Enforcement Law, 2nd edition, 2021, art. 979, page 551), the debtor for whom the execution is carried out is entitled to object to the ranking table regardless of the, possibly, remaining amount of the auction for his benefit, following the exclusion of the claim of the objector. That is, the debtor is entitled to request the exclusion of a creditor's claim disputing its existence in whole or in part, also requesting the ranking of the prosecuting or another announced creditor, provided that this way he is relieved from an existing claim against the latter, disputing the ranked unsubstantiated or baselessly announced claims (See Court of Appeal of Athens 1461/2021 according to which "{...} There is also a legal interest in exercising an objection by the debtor for whom the execution is carried out when he either claims that one or more of the announced creditors were wrongly included in the ranking table, with the consequence that he cannot collect a certain surplus from the auction, or disputes the existence or size of a certain claim that was ranked and seeks the reform of the table in favor of the prosecuting the execution or some of the announced creditors as to the amount that they were not ranked, provided that the related ranking relieves the objector from the corresponding debts to them {...}.
Similar assumptions in the Supreme Court 928/2002, which rules that the objection of the debtor is admissible with which the latter supports that the ranking of her opponent - the creditor of the objection "is lawful only for his claims from capital gains tax and real estate, amounting to 2,278,261 drachmas, while his claim from his substitution in the rights of the lending bank, amounting to 5,166,754 drachmas, should not have been ranked, because with the provision of the above guarantee by him to the said Bank, the guarantees existing until then by third parties for the debt of the primary debtor were released, among which includes a guarantee given by the appellant with a related contract in favor of the primary debtor (creditor) company" and requests, at the same time, to reform the aforementioned ranking table, in order to "limit the ranking of the respondent to the amount of 2,378,261 drachmas and to rank, in the part of the auction that will be released, i.e., in the amount of 22,960,915 drachmas after the drafting of a supplementary table by the officer of the auction, the prosecuting the auction, with the aim of relieving the appellant of a corresponding obligation towards the prosecuting {…}.
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