SEV: Rules on bankruptcy need fixing
The legal framework for streamlining insolvent enterprises and restructuring their loans – which is a key tool for banks in their battle to reduce nonperforming loans – remains inefficient, according to an analysis issued on Tuesday by the Hellenic Federation of Enterprises (SEV).
The main weaknesses of the law as cited by the report are a series of tax obstacles that it introduces and the absence of a cohesive framework that would uniformly tackle issues such as the state’s obligation to participate in debt write-offs and the provision of a second chance to entrepreneurs who are not strategic defaulters.
World Bank data show that it takes an average of three-and-a-half years for bankruptcy procedures to be completed in Greece (often stretching up to an entire decade) while only 35 percent of enterprises’ value is saved, against an average rate of 80-90 percent in mature eurozone economies.
Therefore SEV is proposing the removal of tax counterincentives (such as the nonpayment of tax rebates due to companies), the participation of the state throughout the bankruptcy process through debt forgiveness, and the provision of a second chance to benevolent debtors, among other suggestions.
