Forced Collection of a Commercial Claim through the Issuance of a Payment Order against the Agent and Conservative Seizure based on a Final Determination Judgment

Critical Points: 

- The case concerned a dispute between a limited liability company trading in electrical equipment (the assignor) and a limited liability construction company (the opposing party). The latter, for the purpose of settling a commercial claim of the assignor for the sale and installation of electrical equipment, issued a cheque (bounceless) on its order and, until the settlement of the case below, had paid nothing to the lending company and had no apparent assets.

- Before the case was taken up, a payment order had been issued against the debtor company, but it could not be enforced in any way because of the lack of apparent assets of the debtor company, as has been pointed out, and because of the lack of enforceability against managing directors - representatives or shareholders - individuals.

- The correct legal handling of the case led to the immediate and rapid recovery of the outstanding debt through the following actions: (a) the issuance of a payment order against the legal representative of the debtor company; (b) the reaching of a settlement with the debtor company, which made an assignment to our client of its claim against a solvent third party hotel company, (c) the imposition of a conservative attachment against the third hotel company on the basis of the above-mentioned assignment and final judgment of the Athens Court of First Instance recognizing the claim between the original debtor and the third company; and (d) the achievement of a settlement with the latter third - subsequent debtor company.

Background: 

A limited liability company trading in electrical equipment maintains a commercial claim against a limited liability construction company from the sale and installation of such equipment. The debtor company issues a cheque on the order of the lender and in payment of this claim. The lending company further assigns (endorses) that cheque to its own creditor. The latter presents the cheque for payment, but the cheque is not paid for lack of a counterpart (bounced) and is therefore drawn against the last endorser, i.e. the electrical equipment company and our client. The latter is forced to pay the cheque and, in turn, as the new endorser of the cheque, is brought against the issuing construction company. The lending company issues a payment order which has been in its possession for six years and is unable to collect it in the absence of any apparent assets of the debtor-construction company. 

Strategy: 

The key points for the successful outcome of the case in favour of our client lender were: 

- The legal achievement of a new payment order against the legal representative of the debtor company due to the tort of issuing a bounced cheque and the creation, as a result, of an enforceable title against the personal property of the individual.

- The thorough search for the assets of the above-mentioned individual, the parallel initiation of enforcement proceedings against him in favour of banking institutions and other third parties and criminal proceedings, which led to an advantageous settlement proposal by the opposing party, in order to stop the above enforcement actions.

- Targeted negotiation to secure our client and achieving an assignment to the latter of the debtor's claim against a solvent hotel service company. It should be noted that the existence of this claim had been judicially recognised by a final decision of the Athens Court of First Instance.

- The immediate imposition of a conservative attachment under Article 724 of the Civil Code on the bank accounts of the hotel services company on the basis of the assignment agreement and, of course, the final judgment of the Athens Court of First Instance.

- The effective and consistent out-of-court legal treatment of the claims of the hotel services company concerning the lack of a legal possibility to impose a conservative attachment by a final declaratory judgment (according to the latter's claims, the conservative attachment under the above-mentioned article of the Code of Civil Procedure can only be imposed by a judgment of nullification), which led to the latter's well-founded doubts as to the success of the legal remedies it had exercised against our client and the imposition of a conservative attachment by a final declaratory judgment. 

Outcome:

All of the aforementioned planned actions led the original debtor - a construction company, in order to avoid the risk of enforcement against its representative, to make an assignment to our client of a readily recoverable claim, which had also been recognised in court. It should be noted, moreover, that the aim from the outset was the immediate collection of money and not the involvement in costly and time-consuming enforcement proceedings against movable and immovable property of both the original (construction) and the subsequent (hotel) debtor company. The imposition of a conservative attachment on the bank accounts of the hotel company during the summer season and the risk that the latter's legal remedies against the seizure would not succeed led it to reach a compromise and to waive its legal remedies against the imposed attachment. Our client, having waived that conservative seizure, immediately and without any legal proceedings, recovered a large part of the debt originally owed. 

Conclusion: 

It is common, particularly in the field of commercial debt collection, even if the debtor succeeds in issuing an enforceable title (a payment order, as in this case, or a final court judgment) in practice, to be unable to satisfy his claim from the property of an individual, either because it does not exist or because it is misappropriated. This is often the case as debtors choose to operate in the form of companies for whose debts they are not liable with their personal property. However, our experience in this case teaches us that sound procedural choices can create personal liability of individuals where, seemingly, it is impossible. And the exercise of appropriate and always legally legitimate pressure leads to compliance by even the most recalcitrant debtors.