July 2022

Decision of the Piraeus Court of Appeal on the Suspension of the Auction in the absence of legalisation of the servicer

The decision No. 467/2022 of the Piraeus Court of Appeal which ordered the suspension of the electronic auction of real estate (two horizontal properties) was published. This decision is the first, to our knowledge, nationwide at the level of the Court of Appeal to rule on the lack of powers of a non-entitled party in a Servicer of Law 3156/2003 (on securitisation). In this regard we have already written (see here): 'The third issue that arises, and it is quite serious, is that of the possibility for Servicers to proceed themselves with enforcement actions (foreclosure, etc.) on behalf of the respective Funds, when the transfer of the loan receivables has not taken place under the Red Loans Act 2015 (Law 4354/2015) but under the Securitisation of Receivables Act 2003 (Law 3156/2003). Much has been written on this issue and it has already been accepted by part of the case law that the transfer under the 2003 law is not sufficient to confer the relevant legal status to the Servicers (see decision No. 4715/2021 of the Athens Court of First Instance and a recent article by the Vice President of the Supreme Court: "Consequently, any procedural action attempted on behalf of the special purpose company for the purpose of obtaining claims, e.g. an action, intervention, main or additional, brought by it is inadmissible for lack of legitimacy"). If we accept this view, a serious problem arises in thousands of enforcement and accelerated auction actions as most transfers of "red loans" have not taken place under the 2015 Act but under the 2003 Act. Simply put, i.e., if we accept the above view, in most cases the foreclosure of e.g. a property cannot be carried out by the Servicer but only by the Fund itself".

The crucial passage of the judgment reads as follows: "The preparation and service of the cheque for payment dated 26.6.2013 by which the execution and attachment of the properties owned by the petitioner-debtor was commenced by the preparation of the above attachment report, in satisfaction of the claim amounting to 62. 894.24 transferred by the lending bank to the above-mentioned debt collection company (first defendant) established in Dublin, Ireland, are absolutely invalid acts as enforcement acts in satisfaction of the above-mentioned monetary claim, the beneficiary of which, as stated above, is the foreign special purpose acquisition company, which alone is authorised to carry out those acts, by which the party to the enforcement proceedings acquires the status of a party to the enforcement proceedings as the pursuer (the beneficiary of the claim) and as the debtor of the defendant. ..."....since our procedural system, as stated above, does not allow the institution of voluntary representation".

(For more on this issue see here and here)