Greece’s out-of-court workout regime faces practical hurdles

Author: IFLR Correspondent | Published: 21 Nov 2016

The EU member state is amending part of its para-insolvency framework but the country’s economic situation may prove an obstacle to its successful implementation

In late 2014, Greece adopted an out-of-court workout (OCW) regime for micro-enterprises and self-employed professionals. In spite of its good intentions, the scheme was rarely deployed and is now being replaced. Inevitably, the proposed new law is also destined to fail on the same grounds as the outgoing regime, not due to its lack of sophistication but because workouts are not instigated by the law. Instead, they only take place when there is available financing and an investor-friendly tax regime, which favours business workouts. Unfortunately, Greece lacks both. Unless there is a drastic improvement on these two fronts, the (inter)national legislator will soon be drafting a new reform. If companies are to have any chance for turnaround, the focus should thus be on improving the...