November 2024

Decision of the Single-Member Court of Appeal of Patras on the Suspension of the Auction of Commercial Properties

Decision No. 403/2024 of the Single-Member Court of Appeal of Patras has been published, by which the related application for suspension of our client company was granted, and the enforcement proceedings initiated against the business were suspended. This process would have led to the auction of two commercial properties with a starting bid price of €1,140,000.00, under the condition of a guarantee payment of €8,000.00.

The Court of Appeal found it likely that the enforcement proceedings would be annulled due to the formal submission of an application to the extrajudicial mechanism more than three months before the scheduled auction date. Furthermore, the court held that the extrajudicial mechanism process had not yet been completed due to correction requests submitted by both sides, without fault on the part of the applicant company. Specifically, due to the death of the initial co-debtors/guarantors, the applicant company had submitted a request to the financial institutions to upload the details of the heirs onto the platform – details that were already known to them since the enforceable title had been issued against the heirs. However, this request was still being processed, preventing the continuation of the extrajudicial mechanism process.

Consequently, as the extrajudicial mechanism process was still pending at the time of the discussion of the objection at the first-instance court and at the time of the discussion of the suspension application, the court ordered the suspension of execution.

It is worth noting that Article 18 of Law 4738/2020 provides that the formal submission of an application to the extrajudicial mechanism results in the suspension of individual enforcement actions, including auctions scheduled more than three months after the application’s submission. Although Article 16(1) of Law 4738/2020 states that the process is considered to have failed if the restructuring agreement is not signed within two months from the date of the application’s formal submission, in many cases, the process is significantly delayed due to errors in data entry by creditors or the submission of correction requests.

In cases like the one at hand, where the financial institution fails to take the necessary actions, resulting in the inability to complete the process, the debtor must present their arguments before the courts to ensure protection against any impending enforcement proceedings.