July 2024

Decision of the Athens Magistrate's Court on the Provision of a Second Chance for Debts Exceeding 1,380,000 Euros

Decision number 352/2024 of the Athens Magistrate's Court was published, which accepted the application for small-scale bankruptcy under law 4738/2020, while at the same time rejecting the main intervention filed by a creditor to dismiss the application. Specifically, our client, after years of unsuccessful business activities, had accumulated debts totaling 1,380,048.00 euros, the majority of which, specifically 933,324.79 euros, were owed to the State. The Court ruled that the applicant has become unable to fulfill his due financial obligations in a general and permanent manner and assessed that his unencumbered assets are sufficient to cover the bankruptcy expenses, resulting in the applicant being declared bankrupt.

Regarding the reasons the creditor put forward in his main intervention to dismiss the application under review, the Court ruled as follows: a) concerning the claim of non-service of the bankruptcy application by the applicant after the intervention was filed, it ruled that this cannot establish the inadmissibility of the application or the hearing, b) regarding the proposed objection of inadmissibility due to the non-submission of form E2 and the tax clearance certificate, it ruled that the attachment of only form E1 is sufficient, c) it ruled as legally unfounded the claim by the intervening party that the omission to mention all creditors by the applicant leads to the inadmissibility of the application, d) it rejected the claim regarding the rejection of the application on the grounds that the unencumbered assets of the applicant are insufficient to cover the expenses, and finally, e) it ruled that the claims of fraudulent inability to pay by the debtor were raised irrelevantly and are not examined as they fall outside the subject matter of the trial.

Specifically, regarding the last claim by the intervening party, the Court pointed out that any liability of the debtor for causing the inability to pay can, under certain conditions (only intentional fraudulent actions that constitute direct fraud of the first degree, such as presenting a false financial situation concerning the extent of his assets and income when obtaining loans), lead to non-discharge if an appeal is filed under article 193 paragraph 1.

(for more information see here and here)