A recent interim order was issued by the President of the Athens Court of First Instance, ordering the suspension of the forced execution proceedings initiated by a loan and credit claim management company on a debtor's property, which was the debtor's primary residence. The debtor had definitively submitted their application for inclusion in the out-of-court workout (OCW) mechanism more than three months prior to the scheduled auction date. However, the calculation tool's proposal had not yet been generated due to delays caused by creditors' correction requests. At the same time, the debtor met the eligibility criteria for inclusion in the process and settlement of their debts through the aforementioned tool.
Based on Article 18 of Law 4738/2020, it is provided that the definitive submission of an application for the out-of-court workout mechanism entails the suspension of individual enforcement actions, including any auction scheduled to occur more than three months after the application submission. Additionally, while Article 16, para. 1 of Law 4738/2020 stipulates that the process is considered terminated if a restructuring agreement is not signed within two months from the date of definitive submission of the application, in many cases, the process is significantly delayed due to errors in data entry by creditors or correction requests from them. In such cases, the debtor can defend themselves against the enforcement process and request judicial suspension of the auction under these conditions.
As we have stated elsewhere: "However, this period often proves insufficient in practice, either due to delays by creditors in evaluating the application or due to corrections taking place. In such cases, according to the aforementioned court decisions, it should be accepted that the process has not been completed and that the suspension under Article 18 continues to apply.
Moreover, the suspension in collective procedures, such as the out-of-court mechanism, is not solely for the benefit of the debtor; it primarily serves the interests of the creditors, ensuring that no creditor gains an unfair advantage over others. It is a legally mandated 'breathing period' to allow necessary negotiations to take place calmly, benefiting both the debtor and the creditors as a whole".
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