January 2020

The Interim Order Prohibiting the Termination of Credit Agreements

The Athens Court of First Instance issued a temporary injunction prohibiting the termination of credit agreements for an alleged debt of approximately €5.5 million, according to the credit institution. In particular, any legal and factual alteration of the legal relations at issue was prohibited, subject to the monthly payment by the borrower company of EUR 5 000. The basis of the application was based, on the one hand, on the questioning of the total alleged debt and, on the other hand, on the credit institution's pretextual compliance with the Code of Conduct. According to the Code, credit institutions must 'take into account the current and, on the basis of conservative and reliable assumptions, estimated future repayment capacity of each natural or legal person borrower until the end of the new repayment schedule, so that the arrangement is not used simply to disguise the actual risk levels of the exposures concerned, thereby leading to greater indebtedness of the borrower and increasing the potential losses for the bank. For this reason, an "appropriate solution" for the purposes of the Code is considered to be one that ensures that the bank complies with its supervisory obligations while taking into account the overall financial situation of the borrower'. In the case at issue, the bank's final proposal was not based on the real possibilities of the company.