November 2021

Interim Order of the Athens Court of First Instance on the Prohibition of Modification of Bond Loan Agreements

On 2.11.2021, the Athens Court of First Instance issued a temporary injunction by the Athens Court of First Instance on the prohibition of legal and factual changes to two bond loan agreements and a credit agreement with a mutual account that our client company had received, with an alleged debt of approximately three million euros. Our client creditor company had already joined the Extrajudicial Mechanism of Law No. 4469/2017, however, the procedure had not yet been completed. An important role in this was played by the attitude of the opposing bank and, following the transfer of the claim to a foreign company, the servicer of the disputed claims with their successive requests for postponement, as well as their objections to the expert's draft, which the same bank had proposed. In this context, and while the resubmission of the expert's business plan was pending, contacts were made with the relevant officials of the opposing party to explore the possibilities of settling the company's alleged debts through the out-of-court procedure. However, just one week after the aforementioned communication, the opposing management company proceeded to close the accounts servicing the aforementioned loans and was preparing to proceed with the service of notice of termination of the contracts in order to rush to register collateral on real estate free of charge of the guarantors before any other creditors. The reason for the impending termination was the non-payment of certain instalments of principal of the bond loans, in respect of which the company had sought adjustment following an unexpected change in circumstances due to the pandemic, which the opposing party had acknowledged, but refused to adjust. As soon as the company discovered that its accounts had been closed, it applied to the competent courts for an interim injunction. With the prohibition on termination of the contracts ordered, the creditor company can continue negotiations under the mechanism with all its creditors without fear of termination and of competition between creditors to register collateral on the company's assets and the guarantors, actions which would definitively frustrate the attempt to settle the debts through the out-of-court procedure.