17 FAQs on Small-Scale Bankruptcy

Small-scale bankruptcy (Arts. 172–188 of Law 4738/2020) constitutes the “simplified procedure” introduced by the Insolvency Code to decouple bankruptcy eligibility from trader status: under Art. 76§1 of Law 4738/2020, all natural persons — without exception — now acquire bankruptcy capacity. This is a regime in force since 1 June 2021, designed to provide a fresh start and a resolution to financial deadlock.

Eligibility requires meeting the “very small entity” criteria of Art. 2 of Law 4308/2014 — for natural persons, assets must not exceed €450,000 — as well as the existence of cessation of payments within the meaning of Art. 77§1 of Law 4738/2020. The central discharge mechanism — registration in the Electronic Insolvency Register (EIR) — operates automatically after three years, or one year for debtors meeting the stricter conditions of Art. 92§3.

Automatic discharge is not a self-executing entitlement, but a mechanism that requires careful deployment, sound legal guidance, and timely handling. This guide answers 16 key questions — from eligibility conditions and required documents to the limits of discharge, creditor challenges, and the special procedure for company directors.

Section 1: Definition, Scope, and Eligibility

1. What is small-scale bankruptcy under Greek law?

Under Law 4738/2020, the bankruptcy procedure is decoupled from trader status and all natural persons acquire bankruptcy capacity. The “simplified small-scale bankruptcy procedure” (Arts. 172–188 of Law 4738/2020) is a special regime within this reform, operative from 1 June 2021. It is a procedure designed, according to the law, for judicial economy and faster access to insolvency protection, offering a solution to financial deadlock and providing a fresh start.
Read more: Small-Scale Bankruptcy under the New Insolvency Code

2. Who qualifies for the small-scale bankruptcy procedure?

Under Art. 78§2 of Law 4738/2020, small-scale bankruptcies are those where the debtor satisfies the criteria for “very small entity” status under Art. 2 of Law 4308/2014: total assets up to €450,000, net turnover up to €900,000, and average workforce up to 10 employees. The legislator also provides for analogical application to natural persons based on the value of their assets: to qualify, the person’s asset value must not exceed €450,000, with real property typically valued at the ENFIA tax-assessed value under Art. 11§1 of Law 4738/2020.
Read more: Small-Scale Bankruptcy under the New Insolvency Code

3. What does “cessation of payments” mean and how is it established?

A debtor is declared bankrupt when in a state of cessation of payments — that is, when unable to meet due monetary obligations in a general and permanent manner (Art. 77§1 L. 4738/2020). Specifically for small-scale bankruptcies, Art. 176§1 presumes cessation of payments when the debtor has failed to pay due obligations to the State, Social Security funds, or credit institutions at a rate of at least 60% for at least six months, provided the unserviced obligation exceeds €30,000. Selective fulfilment of obligations does not lift the cessation. However, the presumption is rebuttable: even where the debt falls below €30,000, the petition may succeed if the documents objectively demonstrate payment incapacity.
Read more: Small-Scale Bankruptcy — Procedural Requirements

Section 2: The Bankruptcy Declaration Procedure

4. Which court has jurisdiction over small-scale bankruptcy?

Under Art. 172§2 of Law 4738/2020, the competent bankruptcy court is the Single-Member Court of First Instance (Monomeles Protodikeio) in the district where the debtor has his principal residence, if not engaged in business activity, or the centre of his main interests.
Read more: Small-Scale Bankruptcy — Procedural Requirements

5. What documents are required for a small-scale bankruptcy petition?

Where the petitioner does not publish financial statements, the following documents must be filed on pain of inadmissibility: (a) the most recent income tax return (E1); (b) the real property declaration (E9) or equivalent statutory declaration of non-ownership; (c) a list of all creditors; (d) a certificate from the competent Tax Office — or, in Attica, from KE.B.EIS. — for State debts; and (e) a Land Registry or encumbrances certificate (where real property exists). The petition must also be accompanied by a deposit receipt from the Loans and Consignments Fund for €250; the original must be included in the physical file. Under Art. 178§1 of Law 4738/2020, no deposit is required where it is probable that the debtor’s assets are insufficient to cover procedure costs.
Read more: Asset Insufficiency as a Ground for Accepting/Rejecting a Bankruptcy Petition

6. What happens when the debtor’s assets are insufficient to cover procedure costs?

Bankruptcy is declared when it is probable that the debtor’s assets or income are sufficient to cover the costs of the procedure. Otherwise, the court orders registration of the debtor’s name in the Electronic Insolvency Register (EIR) without declaring bankruptcy. In the EIR registration scenario, no trustee is appointed and individual creditor enforcement actions are not stayed. Critically, according to case law (Efeteio Athinon 1182/2019), what matters is the realisable value of assets — the liquidation value they could achieve in the market, not their nominal value. Even in the EIR scenario, discharge occurs after three years from registration (Art. 192 L. 4738/2020).
Read more: Asset Insufficiency as a Ground for Accepting/Rejecting a Bankruptcy Petition

Section 3: Assets and Income During Bankruptcy

7. What assets does the debtor retain during bankruptcy?

During bankruptcy, the debtor retains exempt income — €1,250 per month or, if higher, the income corresponding to reasonable living expenses, which amount to €6,448 per year for a single adult. Salary and pension are included among exempt assets (under Art. 982§2 of the Code of Civil Procedure), so the majority of annual income is automatically outside the bankruptcy estate, given that the law does not include in the estate income corresponding to reasonable living expenses. Furthermore, anything the debtor acquires after the declaration of bankruptcy — the so-called post-bankruptcy estate — is not included in the bankruptcy estate.
Read more: What Assets the Debtor Retains in Bankruptcy

8. When are the debtor’s annual incomes fully excluded from the bankruptcy estate?

Under Art. 92§3 of Law 4738/2020, the debtor’s annual incomes are fully excluded from the bankruptcy estate, irrespective of amount, where the bankruptcy estate includes the primary residence and/or fixed assets: (a) valued above 10% of total liabilities and (b) of a minimum value of €100,000, (c) excluding assets acquired in the last 12 months. Under MPC Athens 564/2025, debtors who satisfy the above conditions without having any income are also eligible — the existence of income is not a prerequisite.
Read more: Application for Income Exclusion from the Bankruptcy Estate and Discharge in One Year

Section 4: Debt Discharge: The Fresh Start

9. When does automatic discharge from debts occur?

Under Art. 192 of Law 4738/2020, discharge occurs automatically upon the expiry of three years from the declaration of bankruptcy or registration in the Electronic Insolvency Register (EIR), unless a creditor files an objection. Specifically, discharge covers personal debts and debts arising from joint liability that relate to a period before submission of the bankruptcy petition, regardless of when a title was issued or a claim registered. Indicatively, Order 10/2025 of the Dramas Court of First Instance confirmed the discharge of a debtor from debts amounting to €153,562.23 due to the expiry of the three-year period from EIR registration — one of the first such orders under Law 4738/2020.
Read more: The Fresh Start for Entrepreneurs under the New Insolvency Law

10. Which debts are excluded from discharge?

Discharge does not cover, expressly under Art. 194 of Law 4738/2020, four categories of debts: (a) debts arising after submission of the bankruptcy petition; (b) debts from wilful misconduct or gross negligence causing death or bodily harm; (c) debts from predicate offences of money laundering under Law 4557/2018 (e.g. criminal organisation, terrorism, bribery, tax evasion) — with the explicit clarification that the “offence of non-payment of debts to the State” is excluded from this category, meaning that tax debts are subject to normal discharge — and (d) maintenance obligations (Arts. 1391–1392, 1442 and 1485 of the Civil Code). An irrevocable criminal conviction is a necessary prerequisite for the application of category (c).
Read more: Which Debts Are Not Discharged After Bankruptcy Discharge

11. How can a creditor challenge the discharge?

A creditor may file an objection against discharge under Art. 193 of Law 4738/2020, invoking one of the exhaustively listed grounds: fraudulent conduct before or during the bankruptcy, bad faith, failure to cooperate, fraudulent concealment of income or assets, pending criminal prosecution for felony offences (theft, fraud, embezzlement, fraudulent conveyance, forgery) or conviction. The invoking party bears the burden of pleading and proving these circumstances. In the case law, Polymeles Protodikeio Rodopis 26/2023 dismissed an objection, finding that the debtor’s financial difficulties resulted from the general economic crisis and that the debtor had cooperated, while Trimelés Efeteio Thessalonikis 588/2020 upheld an objection where the debtor had continued activity knowing of the inability to pay and had provided false information.
Read more: Creditor Challenge to Bankruptcy Discharge — Early Court Practice

12. When does discharge occur in one year instead of three?

Under Art. 92§3 read together with Art. 192§2 of Law 4738/2020, discharge occurs in one year from the declaration of bankruptcy where the bankruptcy estate includes the primary residence and/or fixed assets valued above 10% of total liabilities, of a minimum value of €100,000 and not acquired within the last 12 months. Indicatively, MPC Athens 564/2025 upheld the petition of a debtor with zero income, debts of €1,380,048.00 and assets valued at €268,816.35 — as these assets exceeded both €100,000 and 10% of total debts — finding that discharge had occurred within one year. The decision clarified that debtors without income are also entitled.
Read more: Athens Court of First Instance Decision — Recognition of Discharge in 1 Year

Section 5: Revocation and Special Categories of Debtors

13. Can discharge be revoked after it has taken effect?

Under Art. 194§2 of Law 4738/2020, discharge may be revoked within three years from its taking effect, if it is established that the debtor fraudulently concealed income or assets or breached a repayment plan. Revocation requires a court judgment upon creditor application — it does not occur automatically. The bankruptcy court may also, by reasoned decision, limit discharge to certain debts only (partial discharge), set a deadline for the debtor, or determine an exceptionally longer discharge period — since the rule of automatic discharge does not preclude judicial shaping of the conditions for its occurrence.
Read more: Creditor Challenge to Bankruptcy Discharge — Early Court Practice

14. Does the automatic discharge also cover company directors for corporate debts?

Under Art. 195 of Law 4738/2020, the automatic discharge extends to legal representatives of legal persons. It covers managers, executive presidents, managing or delegated board members who are jointly and severally liable for the company’s tax and social security debts to the State and EFKA (under Art. 49 of Law 5104/2024 and Art. 31 of Law 4321/2015) — not for their personal debts. Discharge takes effect automatically upon the expiry of 24 months from the declaration of bankruptcy or 36 months from EIR registration, unless a timely objection is filed. Indicatively, KE.B.EIS. Attikis issued a certificate of discharge to the manager of a limited liability company from corporate debts amounting to €992,880.91, arising primarily from corporate income tax and VAT.
Read more: Automatic Discharge of Company Directors from Corporate Debts

Section 6: Practical Considerations

15. How is discharge officially confirmed?

Under Law 5072/2023, the procedure was introduced whereby the examining bankruptcy judge confirms the occurrence of discharge by issuing a declaratory order (diapistotiki praxi). Order 10/2025 of the Dramas Court of First Instance is among the first issued in an EIR case.
Read more: Dramas Court Order — Confirmation of Discharge from Debts After Bankruptcy

16. What is the practical significance of the “fresh start” for the debtor?

The decoupling of the personal liability of directors from purely corporate obligations constitutes a fundamental break in insolvency law, reinforcing entrepreneurship and the fresh-start rationale. Not only former entrepreneurs benefit from the mechanism, but also shareholders, board members, and natural persons who acted as guarantors. The institution, following Law 4738/2020, genuinely provides a second chance and the possibility of a new beginning, with continuous legislative improvements. However, automatic discharge is not a self-executing entitlement: it requires careful deployment, sound legal guidance, and timely handling — particularly to prevent a creditor challenge that could derail the process.
Read more: The Fresh Start for Entrepreneurs under the New Insolvency Law

Conclusion

It is evident that the institution of bankruptcy, following the enactment of Law 4738/2020, genuinely provides a second chance and the possibility of a new beginning, while new regulatory improvements are continuously introduced — from the clarification in Law 5222/2025 requiring a court order for income exclusion, to the amendments to Art. 192§4 for EIR cases. For a debtor who meets the conditions, small-scale bankruptcy is no longer the “disgrace” that applied under the old law — it is a legal tool for rehabilitation.

However, automatic discharge is not a self-executing entitlement, but a mechanism that requires careful deployment, sound legal guidance, and timely handling. Full analysis of the cases and the evolving case law is available at psarakislegal.com.

Key Findings — Summary Table

Key Finding	Legal Basis	Practical Implication	Note
Small-scale bankruptcy applies to all natural persons with assets not exceeding €450,000, regardless of trader status.	Art. 78§2 L. 4738/2020; Art. 2 L. 4308/2014	Any individual — entrepreneur or not — may petition for bankruptcy under the simplified procedure.	For natural persons, the threshold is assessed on asset value per Art. 11§1 L. 4738/2020.
Cessation of payments is presumed when at least 60% of debts to the State, social security funds, or credit institutions remain unpaid for 6 months and exceed €30,000.	Art. 176§1–2 L. 4738/2020	Once the threshold is met, the debtor need not prove inability to pay — the burden shifts to creditors to rebut the presumption.	The presumption is rebuttable. Even below €30,000, a petition may succeed on objective insolvency evidence.
Where assets are insufficient for procedure costs, the court orders registration in the Electronic Insolvency Register (EIR) without declaring bankruptcy.	Art. 178§1 L. 4738/2020	No trustee is appointed and individual creditor enforcement actions are not stayed — the debtor must manage creditors independently.	Discharge occurs automatically after 3 years from EIR registration, same as full bankruptcy.
Automatic discharge from all pre-petition debts — including tax debts — is granted after 3 years from bankruptcy declaration or EIR registration.	Art. 192 L. 4738/2020	Tax debts (income tax, VAT) are fully dischargeable; only debts from predicate money laundering crimes (excluding mere non-payment) and maintenance obligations are excluded.	A creditor may file an objection within the 3-year period. Absent an objection, discharge is automatic.
Accelerated 1-year discharge is available when the bankruptcy estate includes the primary residence or fixed assets exceeding 10% of total liabilities and at least €100,000.	Art. 92§3 and Art. 192§2 L. 4738/2020; Art. 245 L. 5222/2025	The court must issue a specific order granting the 1-year discharge. Zero-income debtors also qualify provided the asset thresholds are met (MPC Athens 564/2025).	Assets acquired within the last 12 months are excluded from the calculation.
The automatic discharge under Art. 195 L. 4738/2020 extends to legal representatives of companies for corporate tax and social security liabilities.	Art. 195 L. 4738/2020; Art. 49 L. 5104/2024; Art. 31 L. 4321/2015	Directors and managing partners are discharged from vicarious liability for company debts after 24 months (bankruptcy) or 36 months (EIR) — without separate petition.	Applies only to corporate tax/EFKA liabilities, not to personal debts of the representative.
Discharge may be revoked within 3 years if the debtor fraudulently concealed assets or income, or breached a repayment plan.	Art. 194§2 L. 4738/2020	Revocation requires a court judgment upon creditor application — it does not occur automatically. The court may also grant partial discharge as an alternative.	The 3-year revocation window starts from the date of discharge, not from the bankruptcy petition.Key Finding Legal Basis Practical Implication Note Small-scale bankruptcy applies to all natural persons with assets not exceeding €450,000, regardless of trader status. Art. 78§2 L. 4738/2020; Art. 2 L. 4308/2014 Any individual — entrepreneur or not — may petition for bankruptcy under the simplified procedure. For natural persons, the threshold is assessed on asset value per Art. 11§1 L. 4738/2020. Cessation of payments is presumed when at least 60% of debts to the State, social security funds, or credit institutions remain unpaid for 6 months and exceed €30,000. Art. 176§1–2 L. 4738/2020 Once the threshold is met, the debtor need not prove inability to pay — the burden shifts to creditors to rebut the presumption. The presumption is rebuttable. Even below €30,000, a petition may succeed on objective insolvency evidence. Where assets are insufficient for procedure costs, the court orders registration in the Electronic Insolvency Register (EIR) without declaring bankruptcy. Art. 178§1 L. 4738/2020 No trustee is appointed and individual creditor enforcement actions are not stayed — the debtor must manage creditors independently. Discharge occurs automatically after 3 years from EIR registration, same as full bankruptcy. Automatic discharge from all pre-petition debts — including tax debts — is granted after 3 years from bankruptcy declaration or EIR registration. Art. 192 L. 4738/2020 Tax debts (income tax, VAT) are fully dischargeable; only debts from predicate money laundering crimes (excluding mere non-payment) and maintenance obligations are excluded. A creditor may file an objection within the 3-year period. Absent an objection, discharge is automatic. Accelerated 1-year discharge is available when the bankruptcy estate includes the primary residence or fixed assets exceeding 10% of total liabilities and at least €100,000. Art. 92§3 and Art. 192§2 L. 4738/2020; Art. 245 L. 5222/2025 The court must issue a specific order granting the 1-year discharge. Zero-income debtors also qualify provided the asset thresholds are met (MPC Athens 564/2025). Assets acquired within the last 12 months are excluded from the calculation. The automatic discharge under Art. 195 L. 4738/2020 extends to legal representatives of companies for corporate tax and social security liabilities. Art. 195 L. 4738/2020; Art. 49 L. 5104/2024; Art. 31 L. 4321/2015 Directors and managing partners are discharged from vicarious liability for company debts after 24 months (bankruptcy) or 36 months (EIR) — without separate petition. Applies only to corporate tax/EFKA liabilities, not to personal debts of the representative. Discharge may be revoked within 3 years if the debtor fraudulently concealed assets or income, or breached a repayment plan. Art. 194§2 L. 4738/2020 Revocation requires a court judgment upon creditor application — it does not occur automatically. The court may also grant partial discharge as an alternative. The 3-year revocation window starts from the date of discharge, not from the bankruptcy petition.