February 2025

Completion of Debt Settlement Process Through the Out-of-Court Mechanism with Debt Write-Offs to EFKA and AADE Amounting to Approximately 4 Million Euros

A bilateral debt settlement process under the out-of-court debt settlement mechanism of Law 4738/2020 has been successfully completed, through which the debt of a société anonyme was restructured. The settlement covered an amount of €2,987,477.06 owed to the State and €5,056,421.65 owed to e-EFKA, totaling €8,043,898.71.

As part of the settlement, a total write-off amounting to €3,931,596.81 was approved for both creditors. The remaining debt was restructured for the maximum repayment period permitted by law for debts owed to the State and Social Security Funds, specifically 240 monthly installments (20 years), with a fixed interest rate of 3%.

A particularly interesting aspect of the process was that AADE, through a correction request via the out-of-court platform, required the company to declare significant financial data concerning claims and equipment recorded in its balance sheet and trial balance. The company proceeded with an assessment of these claims and equipment, commissioning a relevant report from an auditing firm and a certified appraiser. This was necessary as the claims were against companies that had ceased operations and had no assets to satisfy the claims, while the equipment in question was of considerable age.

By accurately reflecting the value of the company's assets within the out-of-court mechanism, the estimated recovery amount for public creditors in a liquidation scenario was reduced. Consequently, this also impacted the company’s repayment capacity, as derived from the valuation of its assets.

Furthermore, this had a significant impact on both the amount of debt written off and the duration of the repayment plan. As we have previously highlighted, certain debts—such as principal debts from withheld and passed-on taxes, as well as social security contributions—cannot be written off under the out-of-court mechanism. However, debts that are eligible for write-off (e.g., principal debt from other taxes, surcharges, fines, etc.) can only be erased if they exceed the debtor’s repayment capacity. A crucial factor in determining repayment capacity within the calculation tool is the value of the debtor’s assets, as it represents the minimum amount that creditors must necessarily recover.