Blog

With the arrival of the pandemic in our country, the State did what it considered it should to deal with the health and economic crisis. For the protection of life, health, jobs and businesses, among other things. (Unsuccessfully-to a significant degree…)

We are experiencing, already for the second time, a compulsory curfew and a ban on (normal) operation. We reconsidered what it means to coexist with ourselves and our family (more precisely: we had the opportunity to recollect).

Things, in most cases, did not go as smoothly for everyone. Having lost the alibi of long hours, due to professional obligations, our absence from home we had time with our children, our spouses, our partners, ourselves. In other words, we lost our “normalcy”. Did we seize the opportunity to experience and enjoy the “togetherness”?

Teleworking was the sufficient excuse to stay “stuck” on our laptops, ipads and smart phones. And since we were “forced” in long hours of professional self-isolation, that reasonably led to corresponding connections with the relevant devices and the internet. And to disconnections from the “togetherness”. And Christmas?

 

Internet addiction

Internet addiction is a disease. This assumption (already adopted by the WHO) confirms the extent, range and depth of our exposure on the internet.

The pandemic and the second “lockdown” aggravate the problem.

We (both adults and minors) always have sufficient excuses to spend endless, as a rule, hours on the internet. But our exposure to the internet is inevitably linked to corresponding risks. We have already experienced some of them. And they never are of minor importance.

We become more and more aware of the dangers of the internet for children (and rightly so). But: cybercrime potentially affects us all. Without exception.

 

Prevention and repression

Prevention concerns the State, the Society, the Competent Bodies & Organizations, the family and, of course, each of us, individually.

What happens when prevention either does not work or completely fails? When do the perpetrators identify the “cracks” in our devices, networks, systems and attention? When do they manage to penetrate our exclusively personal world? And when does this happen to our children?

When prevention does not work (or fails), repression follows – under the self-evident condition of locating the perpetrator. And then again, we focus on prevention…

The State must create a grid of necessary regulations that provide for severe penal sanctions for those behaviors that go beyond what is socially, morally and legally tolerable. There are a number of criminal regulations concerning cybercrime and the treatment of those who adopt intolerable behaviors (as they are determined by society and the State that expresses it).

 

The criminal provisions

The pace of technological developments is remarkably fast. The legislature in an attempt to follow them, even panting heavily, has enacted a series of provisions concerning offenses committed through computer programs, the internet and unlawful interference with software and devices (which we all use daily to communicate, work, entertain ourselves, trade…). We mainly find them in the Penal Code.

 

In general: provisions referring to cybercrime

Most of them are the relevant provisions in the Penal Code. With time, the legislator tries to manage unknown, until recently, behaviours nobody was concerned about thirty years ago, for example, child pornography on the internet, exposure of our personal moments on social media. Such issues already concern us all – of course the legislator as well.

Penalties for cybercrime may relate to damage to major social goods. Such provisions concern, for example, insults to the democratic regime (Article 135 of the Penal Code), crimes against public order (incitement to disobedience-183 of the Penal Code, incitement to commit crimes, violence or discord-184 of the Penal Code, terrorist acts-terrorist organization) 187A PC, threat of committing crimes-190 PC, spreading of false news-191 PC, crimes related to currency-211 PC).

Of particular interest, however, are those provisions concerning ancillary goods of major value. As such: crimes against the security of telephone communications (292A PC), obstruction of the operation of information systems (292B & C PC), violations of the secrecy of public telecommunications (292D PC), obstruction of telecommunications (292E PC).

Such are those that concern crimes against personal, individual goods, such as social representation – honour (insult, defamation – 361 to 363 PC). Also, those that refer to violations of privacy and communications (breach of confidentiality of documents-370 PC, breach of privacy of telephone communications and oral conversations -370A PC, illegal access to information systems or data-370B, C, D & E PC.

One of the provisions that is gaining more and more interest (due to the frequency of such incidents) is that of computer fraud (386A PC).

 

Sex crimes

Of particular importance are the crimes related to the love life of the individual and are committed through the internet and / or by electronic means.

They have a special social and moral value when it comes to children. Provisions concerning sexual offenses involving child victims are, for example: insult of sexual dignity (337 PC), facilitation of insults to minors (338 PC), and especially child pornography (348 PC), attracting children for sexual reasons (348 PC), pornographic representations of minors (348C PC).

Of course, it is not only children who are harmed by possible public exposure of “non-public” acts. The examples are, unfortunately, innumerable. As a rule, we usually become aware of such incidents involving public figures.

The recent, relevant, mistake of the legislator is serious: Unfortunately, with the reform of the penal code in July last year, the provision of 370A of the Penal Code was re-approached, I want to believe with negligence, which provided that “whoever illegally monitors by special technical means or imprints in a medium a non-public act of another, is punished with imprisonment of up to ten years”. The legislator reserved the same treatment for the one who would make use of the above medium. The specific criminal sanction does not exist, although the provision itself is maintained. Therefore, public exposure (eg circulation on social media or, more generally, on the internet) of a “non-public act of another” – such as so many serious and recent examples – is dealt with by the current Article 370A of the Penal Code, in conjunction with other provisions, no longer as a felony but as a serious misdemeanour.

A counter- argument would appear reasonable. Why is it a crime to photograph a non-fasting priest during a period of fasting? On the other hand, isn’t the circulation on social media and on the internet of a couple’s “personal” moments by an ex-partner a crime of grave social and moral depravity? Aren’t the consequences irreparably catastrophic?

Let us hope for a brief, relevant, redress – especially in the direction of independent addressing of such a crime.

 

And after the prosecution, what?

The aforementioned provisions concern only the sanctions that are threatened in case of occurrence of criminal behaviour and are always imposed a posteriori. It is doubtful whether the perpetrator of such a criminal act will be sent to prison – other than in absolutely extreme cases. The trauma left on the victim will be deep and last a lifetime. Therefore, the solution is only one: prevention. And prevention requires knowledge (but also a lot of effort).

 

Specifically: child pornography

Along with the development of the internet, child pornography began to flourish in the 1990s. It is, without a doubt, one of the scourges of the modern age. An industry that in 2010 was valued (based on a study by the United Nations Office on Drugs and Crime) at an annual turnover of twenty, at least, billion USD. And, already, a decade has passed with an explosive further increase in the use of the internet and cybercrime. We assume that the increase in the relevant valuation will be exponential. And, of course, dramatic – as are its consequences.

It is common ground that the rise of cybercrime is unfortunately linked to the use of the internet. The pandemic and (in particular) the “lockdown” both act as a fertilizer. The addiction (which we allow – and perhaps unconsciously promote) of children to the internet. Respectively, the departure from the traditional family ties, essential relationships, honest, personal and human contact.

We probably all know what to do (and what to avoid) to reduce cybercrime which affects our daily lives and beyond. The actions of Institutions and Organizations are not, of course, sufficient to address it. Nor does policing seem feasible or democratically tolerated by logic: one police officer per citizen. There is a question of internalizing the reason that justifies the ban. An issue of understanding the value of personal responsibility.

 

The dangers of the internet: The second lockdown & beyond it

The dangers of the internet are present. And as time goes on, they magnify. The second “lockdown”, just a few months after the first, the new curfew (which we experience cumulatively with the first), the increased exposure to our computers and smart devices, telework and e-learning make us more vulnerable.

We must all be vigilant: the State, the Society, the Authorities, the Institutions, the School, the Family, each of us. We must protect the most vulnerable groups. The elders and our children. And it is important, without a doubt, to turn to experts. Caution: not to those who work for their own, ultimately, benefit. To those who are proven to work with social responsibility for the common good.

 

Let us not forget: our knowledge of cybercrime will always be limited compared to the perpetrators.

If we accept this, the next day will certainly be better. And even more: we will all be safer and, of course, happier.

And beyond (on the occasion of the already ongoing second lockdown):

Let’s reduce our exposure to the internet.

Let’s reduce the use of our laptops, iPads and smart phones.

Let’s invest in self-improvement, let’s invest in our loved ones, let’s invest in our family.

Together.

Let’s start one of these days.

(After all: it is CHRISTMAS…) .-

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper and makthes.gr (December 20, 2020).

 

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.

The new Law on Insolvency (Law 4738/20) is an extremely important piece of legislation. It will enter into force in just a few days (: January 1, 2021) – two months after its publication. And this, despite its length and complexity (: 265 provisions – not simple in their content & 81 pages in the Government Gazette). The fact that we are experiencing an unprecedented and multifaceted (of course economic) crisis does not seem to be a sufficient reason to move the starting point of its implementation. Possibly rightly so. But maybe not. A great debate has begun (scientific, political, business, social) on the various issues it regulates. Indicatively: on the necessity of another relevant piece of legislation closer to the other nine of the last thirteen years˙ on the validity and truthfulness of the characteristics and qualities attributed to it by its proponents˙ on its usefulness and value˙ on whom, in the end, it concerns. And on so much more. In order to reflect on the relevant matters, it is worth exploring the new law’s basic provisions and innovations.

Let’s focus on the most important amongst them:

Aggregated (and holistic?) Approach

Legislative provisions for the management of private debt were scattered throughout various laws. It was not, of course, inspired by a single “culture” and logic. The new Law on Insolvency seeks to address this extremely important issue “holistically”. This is an ambitious goal, indeed. But several questions arise regarding whether it achieved said goal or not.

The new law, in fact, brings together all the relevant regulations. Specifically: those concerning warning mechanisms in respect of insolvency and prevention procedures (Articles 1 to 30), the pre-insolvency settlement procedure (Articles 31 to 74), insolvency (Articles 75 to 211), enhancement of efficiency and monitoring clauses (Articles 212) – 216), vulnerable debtors (Articles 218 to 226) but also insolvency administrators (Articles 227 to 259). The law ends with common, authorizing and transitional provisions (Articles 260 to 265).

However, some accuse the law of violating the principles of good governance, given the plethora of authorizing provisions (in derogation from Article 3 §2 of Law 4048/2012 “Regulatory Governance: Principles, Procedures and Means of Good Legislation”).

 

The establishing of a precautionary mechanism for early warning

Such a preventive mechanism (Articles 1 to 4) is, in fact, being introduced for the first time in our country.

Within the framework of this specific, precautionary mechanism, procedures are introduced to inform and support debtors (natural and legal persons) to cover or restructure their debts.

Its main goal is the timely warning and support of debtors to avoid being involved in insolvency proceedings. In addition: to avoid violent and unintentional liquidation of their assets. Moreover, Directive 2019/1023, which is rendered national law, has the same (ambitious) objective (see also recital 22 of the Directive).

On the other hand, however, several questions arise. Indicatively: regarding the lack of regulations of the specific mechanism, the lack of functional connection with the other tools and provisions of the legislation, the lack of incentives for joining its regulations and / or sanctions from its avoidance, the real possibility of its timely activation and so on.

 

Creating outlets for debtors who are proven to be in financial difficulty or weakness.

In general

It is possible for those debtors who are proven to be in financial difficulty or unable to manage their debts:

(a) to settle, if they can, their debts (: Article 5 et seq.) or

(b) to be alleviated from their debts through the liquidation of all their assets, in order to have a “second chance” (: Articles 192 et seq.).

 

Especially with regard to the “second chance”

The truly “new” provision that this legislation seeks to introduce is the ability of the debtor to settle quickly, definitively (and at the lowest possible cost) the issue of their excess debt.

To ensure, in other words, that their debts will not burden or follow them for life. Also, that they will not be transferred to their heirs and from those to theirs. And, finally, that other (not at fault) members of the insolvent’s family will not have to be involved because they, just because of their relationship to the debtor, cannot operate under their own name.

This very important problem generated due to excess debt does not only concern the families of the debtor. It concerns the society and national economy as well.

This legislation introduces new elements, but in an institution which has been greatly improved in the context of the recent restructuring of the Insolvency Code. It should be noted, in this context, that the insolvent is now presumed to be in good faith, without having to wait for a relevant court decision. It is also important that the deadline after which the discharge occurs was shortened. Respectively, that the exemption to debts from certain intentional offenses has been extended. However, the issue of debt relief due to the issuance of postdated checks is still pending regarding the debts to the State.

 

Introduction of an integrated and automated framework and system for dealing with insolvency

In general

The specific legislation provides for a specific out-of-court mechanism for settling the debts of natural and legal persons (articles 5 et seq.). This confidential procedure is conducted through a specific electronic platform (Articles 8 et seq. & 29). It provides the possibility of restructuring (and/or reduction/”haircut”) of debts. A prerequisite is the decision of the majority of the financial institutions involved (Article 14). The provision that its implementation becomes mandatory for both the State and the insurance funds if the proposal for settling is the adoption of the proposal that results from the computing tool of the relevant system is of particular interest (article 21 et seq.). The procedure lasts for a maximum period of two months, during which the compulsory liquidation of the debtor’s property is suspended (Articles 13, 16, 18).

This extrajudicial mechanism is undoubtedly a tool that has the conditions to become efficient. As long as the creditors provide the necessary support. More precisely: the banking institutions. The example of the pre-existing out-of-court mechanism, which did not yield the desired results, is unfortunately well known to everyone. Respectively, the reasons for this unfortunate development are well known (eg: digitized bureaucracy, heavy mechanism, gutlessness of the public sector, but mainly the reluctance of the banks).

It should be noted that an important difference between the two mechanisms is that the newly established mechanism does not include debts of third parties, e.g. suppliers — as was the case under the previous regime (which creates a lacking, at least in part, scope).

 

The potential results of the relevant process

Within the aforementioned two months it is possible:

(a) for no regulation proposal to be submitted by financial institutions (Article 5)

(b) for an agreement to be reached (Article 19) or, finally,

(c) for the debtor to reject the restructure proposed by the financial institutions (Article 16 et seq.).

 

The process of the recovery of businesses

In recent years, a significant effort has been made to de-stigmatize not only insolvency but also the process of the recovery of businesses. Anyone who heard of “Article 99” thought that “the patient” was “dying”. Even when it wasn’t like that…

The process of recovery is already becoming unified and modernized based on what Directive 2019/1023 provides. Businesses can resort to it in order to avoid insolvency and its adverse consequences. The consent of two categories of creditors is required (representing at least 50% of the claims of each of their respective categories – Article 34):

(a) those who have special privileges (eg collaterals) and

(b) others (who do not have special privileges)

However, if an agreement is reached with the above categories of creditors representing at least 60% of the total claims – between which there are more than 50% of those with special privileges – said agreement is ratified by the court. And that, even if the majority of the other creditors does not agree – provided, however, that some additional conditions are met (Article 54). Minority creditors are bound by the above agreement, provided that two basic conditions are met (Article 54:)

(a) the non – deterioration of their position; and

(b) equal treatment of creditors belonging to the same category – unless there are serious ́ commercial or social reasons.

It is noted, however, that from the submission of the application to the competent court for the ratification of the relevant agreement and until the issuance of a decision on it, there is a suspension of the prosecution measures of the creditors (article 50 et seq.). However, employees are excluded from the (general) suspension of the prosecution measures against the debtors and can claim, without hindrance, all the debts due to them(Article 52).

 

Insolvency-In General

If the debt restructuring is not achieved, the debtor’s insolvency procedure follows (Articles 75 et seq.). Insolvency affects legal entities. However, it also concerns natural persons – regardless of the existence (or not) of their commercial status (Article 76). It is noted that the possibility of insolvency of natural persons who do non operate on a commercial capacity is a new regulation. It can be proclaimed, under certain conditions, even after their death. Insolvency initiates the process of collective satisfaction of creditors, with the possibility of relieving the debtor of their debts.

 

Legal persons

With regard to legal entities, the decision to declare insolvency dictates the liquidation of either the company (as a whole) or of its individual assets (Articles 75, 79, 158 et seq., Etc.). If it is decided to sell the company as a whole but such sale is not achieved within 18 months, its individual assets are sold (Article 161).

 

Natural persons

In addition to the insolvency of natural persons who do not operate commercially, another new regulation is introduced. Specifically, in order for their final exoneration to take place:

(a) their assets are sold (Article 92)

and, if the price of the sale is not sufficient,

(b) they must contribute with their income that is in excess of the sum of their reasonable living expenses (Article 92).

The systematization and simplification of the relevant procedures. The innovations.

same direction as the 2016 reform).

Key requirement: to complete them as soon as possible. In this context, a number of innovations are provided for. Indicatively:

(a) the introduction of quantitative criteria that make it easier to determine the cessation of payments (Article 77) – [a criterion which is already being discussed, in the light of the current, particularly difficult, economic situation],

(b) the spontaneous and irrevocable termination of employment contracts by the declaration of insolvency (Articles 103 & 109) – [discussed likewise],

(c) the use of electronic media to ensure transparency and publicity (inter alia: Articles 84, 143 and 212 et seq.),

(d) the abolition of the production of supporting documents (which will now be retrieved electronically – indicatively Article 214),

(e) the immediate commencement of liquidation proceedings (indicatively Article 157)

(f) the automatic adjustment of the first bid price in the auction procedures, if they prove to be infertile (Article 164) – [regulation which is also expected to be introduced in the Code of Civil Procedure],

(g) improvements in the institution of insolvency administrators (Articles 227 et seq., indicatively 230),

(h) the introduction of simplified procedures for “small scale” bankruptcies, so that the procedures for insolvency, liquidation and collective satisfaction of creditors can be moved and completed quickly, an institution which has been significantly improved by the current regime and concerns, particularly large business (for example: Articles 172 et seq., in particular 173, 176, 178),

(i) the automatic cessation of the insolvency proceedings after the lapse of five (5) years from its declaration and the recovery of the individual prosecution measures (: article 191 §3). [While according to the existing law (article 166 par. 3 law 3588/2007), the cessation of insolvency proceedings took place after the lapse of ten (10) years from the creditors’ union or the lapse of fifteen (15) years from its proclamation].

 

Exoneration as a consequence of insolvency

In general

The release of debtors from their obligations is inextricably linked to insolvency (Article 192 et seq.) In the spirit of the Directive 2019/1023, which is about to be incorporated.

The release comes extremely soon. Basically, in three (3) years – and in some cases in just one (1) year (Article 192). An exception is the possibility of fraudulent insolvency and concealment of assets by debtors (Article 193), in which case the debtor, as inexcusable, does not enjoy the relevant right.

In case the debtors do not have assets, their exemption will occur in three years. However, in this case they have to pay the excess out of their income, after deducting a sum equal to their reasonable living expenses (Article 192).

 

Strategic defaulters

Those who will be determined as “strategic defaulters” will not be exonerated (Articles 193, 194). However, in order to investigate this specific possibility, special audits are carried out for the detection of hidden assets both in Greece and abroad (Articles 196, 214).

 

The responsibility of the members of the administration of the legal entities that go bankrupt

An old and serious problem concerning the members of the administration of bankrupt legal entities is addressed for the first time. Specifically: the problem of their liability for the debts of the company, even after its insolvency. The new institutional framework exempts these persons within three years from the filing of the insolvency application or within two years from its declaration (whichever is earlier – Article 195).

 

In General

Utilization of production units

The insolvency proceedings that are currently in place are basically endless. The production units of companies under restructuring or insolvency remained closed and, often, inactive for years or, in practice, forever. The acceleration of the relevant procedures is aiming at the faster entry of investors in them (a targeting, after all, of the 2016 reform as well). Of course, the return of these companies to productive operation is (also) for the benefit of the national economy.

 

Non-performing loans

Non-performing loans have been and continue to be a “scourge” for banks and for the economy. The new regulations help the optimal and faster management of the whole problem for the benefit, in this case as well, of the national economy.

 

Financial intermediation

The specific institution, which is used internationally (also in the field of out-of-court settlement of private disputes), is utilized (Article 15 et seq.).

 

Technology

Technology is being used to a significant degree. New electronic and automated procedures are introduced, which promote transparency and eliminate bureaucracy (paragraph 212 et seq.). This is, after all, a section of Directive 2019/1023.

 

Insolvency Administrators

Improvements are being made to the institution in order to further support the insolvency process. (ind. 227 et seq.).

The institution of Insolvency Administrators was introduced in 2015 to replace that of insolvency trustees. The reason was the multiple problems created, among others, by the inadequacy of the latter, the lack of transparency, the problems with their fees. Today, the institution of Insolvency Administrators has not received the expected recognition. Probably because the number of new bankruptcies is small. However, it will undoubtedly resolve issues of transparency and efficiency, despite the fact that the provision that they proposed by creditors when they apply for insolvency raises some reservations (see Article 137).

 

Socially Vulnerable Groups

Provisions are made to protect those who belong to socially vulnerable groups from their lenders. For example, installments of their loans are subsidized (article 28) but also the entitled eligible housing allowance continues to be paid to the Acquisition and Leaseback Agency (article 223).

This section of provisions (the one referring to the Socially Vulnerable Groups) has, for now, become one of the most controversial ones of all the legislation. The reactions that are recorded are many and from almost all sides.

 

The new law will be, from 01.01.2021, the new weapon in our quiver for the management of the (unbearable and multi-layered problematic) Private Debt of our country.

 

Some are already raising concerns about the need for such legislation – especially at this time. They cite, in particular, the fact that we are in the midst of an ongoing pandemic and the consequent deterioration of the economic environment. Also, that both at European and international level there is a suspension of insolvency provisions – let alone those that have such characteristics as the above.

Others would characterize as “inappropriate time” the start of its implementation on 1.1.2021, purely in terms of preparation and lack of knowledge of those immediately involved.

Some others have already assessed the time of its entry into force as perfectly suitable and appropriate.

We are left to see who will prove to be right.

But law is applied by the society: in it its just (or unjust) nature is reflected. The society will make, in this case as well, the final evaluation.

In any case: Let us hope that the new law achieves its goals.

All of them.

It is, after all, a national need.-

Stavros Koumentakis
Managing Partner

 

P.S. A brief version of this article has been published in MAKEDONIA Newspaper and makthes.gr (December 13, 2020).

 

Disclaimer: the information provided in this article is not (and is not intended to) constitute legal advice. Legal advice can only be offered by a competent attorney and after the latter takes into consideration all the relevant to your case data that you will provide them with. See here for more details.