November 2021

Judgment of the Athens Court of First Instance on the Annulment of the Notice of Continuation of the Auction by a Claims Management Company (Servicer)

The decision of the Athens Court of First Instance (interim measures procedure) No. 4715/2021 was issued, which annulled a declaration of continuation of an auction that had been accelerated by a debt management company due to lack of active legalization. In particular, a key claim was accepted, which we have discussed extensively (see also here the relevant article), that debt management companies are only legitimized as non-beneficiary parties when the transfer of the loan claim has taken place under Law 4354/2015 on transfers of red loans and not under Law 3156/2003 on securitizations of claims. In particular, it was held that 'However, the notified document of the management assignment agreement dated 18/6/2021 only makes reference to the provisions of Law 3156/2003, which are not sufficient to confer on the defendant the status of a non-beneficiary party'. This decision is considered to be particularly important as it deprives management companies of enforcement powers in the event that credit institutions have chosen, for reasons mainly linked to the circumvention of the rights of borrowers, to make use of the 2003 legislative framework instead of the 2015 one, which was adopted precisely to address the problem of bad loans in Greece.