After ten years of economic crisis and in the midst of a pandemic, which is very likely to lead to a new recessionary cycle, with all that this entails for the ability of both small and medium-sized enterprises and households to meet their basic obligations, and even more so their loan obligations, the New Democracy government has chosen to bring a Bankruptcy Code before Parliament that deprives those who have found themselves unable to repay their debts of any possibility of getting back on their feet.
Today, even international organizations—fanatical supporters of austerity policies and the doctrine of “internal devaluation” of the period 2008-2015 – are talking about a dramatic deterioration in the living conditions of the poorest sections of society, with data for 2019 confirming this for our country as well. In 2019, the Greek economy stood at 80% of its 2008 GDP. In 2020, it is expected to shrink further by 8.2%, while forecasts for a sharp recovery in 2021 can only be described as utopian, given the pandemic and its impact on the real economy. In this environment of sharp deterioration and given the government's anaemic policies to address the impact of the pandemic on the real economy, with unemployment skyrocketing (up 12.83% in September this year), wages collapsing, household income and consumption shrinking, and SME turnover halved, the government has chosen to bring one of the most anti-social bills to a vote in parliament, treating the problem of private debt as a problem of “strategic defaulters” rather than a problem of “debtors who have found themselves in objective difficulty in meeting their obligations.”.
Despite assurances to the contrary, this logic is reflected in all three critical sections of the bill: bankruptcy, the issue of primary residences, and out-of-court and consolidation procedures. It is characteristic that, for the first time, bankruptcy is established in our legal system not only for those engaged in commercial activities, but also for private individuals. Households, pensioners, and even the unemployed will now be subject to the law. The objective condition for bankruptcy is broadened, the debtor risks having all his assets liquidated (including his primary residence), and even after bankruptcy, they will continue to be liable for any future acquisitions, to the extent that these exceed their “reasonable” living expenses, which are set at approximately €611 per month. This indirectly abolishes the €1,250 exemption.
No primary residence protection
“Protection” for primary residences is now limited to those classified as “vulnerable.” This refers to those with an income not exceeding €7,000 per year (€10,500 for couples), while those engaged in business activities within the meaning of Law 4172/2013 are excluded. In this case, no protection is provided. However, even debtors classified as “vulnerable” are at risk of losing their primary residence. The only option available to them, if they agree to include their primary residence in the bankruptcy estate, is to become a tenant in their own home for 12 years. If they manage to save it until then (non-payment of three months“ rent leads to liquidation), they will be asked to repurchase it at its then market value, without, however, offsetting the rent or loan installments they paid until it ”turned red.".".
These provisions—and dozens of others—clearly demonstrate that this bill does not simply offer a “second chance” to debtors, but is the embodiment of the harshest and most extreme approach to a reality that has millions of borrowers, both legal entities and individuals, as its victims. Its adoption and implementation will undoubtedly lead to the impoverishment of many and the “much-desired—according to the Pissaridis Report—liquidation” of SMEs (according to estimates by the Hellenic Confederation of Small and Medium-Sized Enterprises, the new fast-track bankruptcy procedure regime affects, based on turnover, 81% of small and medium-sized enterprises!), as well as creating conditions for a new regime of accumulation in the Greek economy, with dramatic and knock-on effects on the lives and daily routines of the vast majority of Greek society.
