Out-of-court settlement fails to deliver

The settlement of corporate debts through the out-of-court mechanism is not being used as much for dues to banks as for arranging arrears to the state, according to data seen by Kathimerini.

The figures show that firms have used the mechanism to try settle a total of under 1 billion euros’ worth of debt to banks and that the amount which has been arranged has come to just over 46 million euros. In contrast, many applications have been rejected, mainly due to a shortage of repayment capacity from the part of the borrower.

Out of the 2,920 applications submitted via the mechanism up until early March, only 736 concerned debts to the banks. The amount of the debts on settlement applications came to 927.2 million euros and those that have been settled add up to just 46.1 million, concerning 97 applications. There are 163 applications for debts of 252 million euros that have been rejected, while another 476 applications for debts of 629.1 million euros are still in the process of negotiation.

Sources say that even among the companies that manage to reach an agreement with their banks, there are several that cannot meet the terms of the deals, either because these may be particularly optimistic in relation to the real capacity of each company, or because the borrowers only come to an agreement to buy some time.