October 2021

Provisional Order of the Athens Court of First Instance on the Prohibition of Alteration of the Legal and Real Contract of a Parallel Account

On 21/10/2021, the Athens Court of First Instance issued a temporary injunction by the Athens Court of First Instance prohibiting the legal and factual modification of a mutual debt contract with an alleged debt of more than one million euros. Our client, a creditor of a company, had joined the Extra-Judicial Mechanism of the Law of the Republic of Cyprus in 2018. 4469/2017 but its completion was delayed due to, among other things, repeated transfers/securitisation of loans to special purpose vehicles abroad. In this context, and while the resubmission of the expert's business plan was pending, one of the Servicer companies, which had undertaken the management of a loan claim under a mutual account agreement, set a deadline of a few days to accept its own proposal outside the framework of the out-of-court procedure with the threat of termination and enforcement actions. The creditor company immediately appealed to the competent court, where it obtained interim protection under which the management company was prohibited from making any changes to the contract, including termination of the contract. As a result, the creditor company can continue negotiations within the mechanism without the pressure of termination, which would ultimately torpedo the discussions and encourage other credit institutions to do the same. This is a particularly interesting case in that it demonstrates both the aggressive strategy of the management companies and the fact that the civil courts are the final arbiter of any decisions taken by private individuals, whether they are credit institutions or management companies.