February 2021

Decision of the Athens Court of Appeal on the release of a guarantor from a debt of more than 120,000 euros

The Athens Court of Appeal issued decision no. 1052/2021 which accepted the guarantor's claim for release from liability due to the application of article 862 of the Civil Code (for more on the objection of release see here). It was initially held that it became impossible to satisfy the lender from the primary debtor company since "it was proved that the primary debtor lessee company became financially weak and became insolvent, which led to its dissolution...". The evidence used to prove this insolvency was negative equity, the seizure of equipment by third-party lenders and ultimately the dissolution of the original debtor company. It was then accepted that the lending company had all the indications in front of it which would have allowed it to perceive the imminent default of the first debtor. It was held that 'in view of all of the above, although the plaintiff could, taking into account the previous conduct of the first debtor lessee, foresee its impending financial default, negligently failed to demand the immediate collection of the rent due, and, in addition, as stated above, without the knowledge of the guarantor, extended the deadline for the first three rent payments due, with the result that the debt increased to the above amount'. Finally, it was accepted that if the lending company had taken action at an earlier stage, i.e. in good time, it would have been able to satisfy its claims and would not have been able to take final action against the guarantor.  The relevant passage of the judgment reads as follows: "it was proved that the satisfaction of the claim at issue against the first debtor was initially possible, since at the time the rents at issue became due and payable, the latter had sufficient property to do so. In particular, she possessed, inter alia, movable property (desks, cupboards, sofas, chairs, bookcases, tables, telephone sets, household goods, household appliances, telephone sets, keyboards, computers, computer monitors, computer screens, computer speakers, printers, photocopiers, photocopying machines, woodworking machines, toolboxes, machine shop and dyeing tools, unfinished boats, boat engines, speedboats, etc.)...'. As a result, the guarantor was released from a debt of more than EUR 120 000.