Recovery and crisis management of stakeholders in Greece

Antonis Gkiokas, Senior Director of the law firm M. Psylla – V. Vizas – G. Katrinakis (the legal practice of PwC Greece), provides us with an overview of the Greek distressed asset market and the firm’s offerings in insolvency and organizational restructuring in its jurisdiction.

How would you describe the Greek distressed asset market? What are the main drivers and trends?

The onset of the pandemic shifted corporate focus from investing to crisis management. Especially for companies already in financial difficulty, this has meant moving from complex restructuring solutions to a “survival” mode, supported by government-backed financial incentives and subsidies. However, as the impact of the COVID-19 pandemic fades, the coming months present a new set of challenges.

Nonetheless, distressed transactions in Greece are currently on the rise, with several notable announcements over the past year – a trend we believe will continue, especially given the challenges on the horizon.

Transaction activity is currently shaped by (a) Greek financial institutions, which will continue to offload their NPLs, (b) secondary market loan sales, which have begun, and (c) the sale of businesses or assets of distressed companies. Further investment opportunities are also expected through the Recovery Fund (RRF) scheme.

The Greek government has also helped build momentum by engaging in several complex business rescue operations for struggling companies or the divestiture of their viable business segments, particularly in sectors of high public interest such as defence, shipbuilding, industrial minerals, and energy.

The onset of the pandemic shifted corporate focus from investing to crisis management.

Another recent trend is the acquisition of commercial assets by investors through forced auction processes. Notable recent cases include luxury hotels, industrial sites, and office buildings and complexes. This follows recent improvements to the enforcement and e-auction framework as well as more aggressive marketing strategies employed by banks and NPL service companies.

Could you please provide an overview of recent legislative developments that you believe may shape the Greek distressed asset market?

The Greek government, in implementing its strategic action plan to address the Greek private debt problem while encouraging troubled M&A activity, revamped its collective enforcement framework with the enactment of the new insolvency framework, which should shape trends in transactional activity.

The new legislation harmonized the Greek framework with Directive (EU) 2019/1023 (Restructuring Directive), but also introduced significant changes and procedural improvements aimed at a holistic, uniform, comprehensive and effective set of rules, strengthened through procedural and tax incentives to improve its attractiveness. It introduces a toolbox of processes divided into two broad categories, the first aimed at preventing insolvency and the second at managing bankruptcy, with the notion of business rescue having a central role.

Pre-emption/rehabilitation process tools contemplate sustainable business turnarounds and bailouts through debt and business restructurings, business transformations, or business and asset transfers, even without consent of the debtor in certain limited cases.

The new bankruptcy liquidation process incorporates both tested and new features, aimed at facilitating the rapid return of distressed immobilized assets to productive use, streamlined through an efficient, structured and transparent public auction process via the platform electronic auctions. In particular for the disposal of entire companies, business segments or groups of assets, the corresponding auction process does not require a minimum price.

When a company is undergoing restructuring, why is it essential to engage with key stakeholders?

Successful restructurings are complex exercises, especially when they involve debt rescheduling agreements combined with corporate or operational reorganizations. An important factor is that distressed companies generally face serious difficulties in finding financing from Greek financial institutions, even for working capital purposes, however, the latter are more willing to provide financing to investors seeking to engage in restructuring plans and distressed transactions.

Successful restructurings are complex exercises, especially when they involve debt rescheduling agreements combined with corporate or operational reorganizations.

Therefore, an essential ingredient for achieving a successful restructuring is the active and timely engagement of key stakeholders such as company management, shareholders, potential investors, institutional lenders, bondholders and other creditors exposed to significant risks. Restructuring must also take into account socio-economic impact, with a particular focus on workers’ rights, local economies and supply ecosystems, particularly when including financially vulnerable social groups.

Can you share examples of services that the PwC Greece legal practice offers in this area?

We believe that successful business takeovers generate sustainable businesses, contribute to economic stability and strengthen corporate sustainability indices, while freeing up human resources and capital stuck in distressed situations.

Our dedicated insolvency and recovery practice has steadily developed, grown and expanded into transactional work with substantial exposure in the corporate and financial sector, working in a variety of roles and mandates with significant experience in landmark transactions in the distressed assets and NPL sectors. Our transaction credentials include historic acquisitions of distressed companies through formal pre-insolvency restructuring tools, navigating international investors to implement their strategic growth plans, maximizing their benefits and incentives from of the relevant framework.

The Insolvency and Recovery Practice forms part of PwC’s core transactional legal practice, which currently has 15 legal professionals. We cover the broader universe of corporate and financial law advice, focusing on three key pillars: (i) insolvency and restructuring (involving litigation and non-litigation work); (ii) acquisitions of listed and unlisted companies in Greece and abroad and iii) transactional banking and financial projects.

Our transactional teams are further complemented by our labor law, real estate transactions and regulatory practices, which provide support on transactional, regulatory and compliance matters (including capital markets, regulatory compliance, takeover bids, anti-money laundering and GDPR). The transactional practice combines its offer with structuring services with the PwC tax practice, as well as our PwC International network of legal partners leveraging our presence in more than 95 jurisdictions, and also complemented by the offers of our PwC Deals-Business practice. Recovery Services.

Antonis Gkiokas, Senior Manager, Insolvency Practice Leader

Law firm M. Psylla – V. Vizas – G. Katrinakis (PwC legal network)

268 Avenue Kifissias | 15232 | Athens | Greece

Telephone: +30 210 687 4012 | Mobile: +30 694 164 2853

Email: [email protected]

www.pwc.gr

Antonis Gkiokas is the leader of PwC’s Insolvency practice in Greece. He is a seasoned lawyer with experience in distressed mergers and acquisitions transactions, insolvency law, corporate law and restructurings. He also advises financial institutions in developing their portfolio recovery strategies. Its exposure also extends to NPLs and ordinary M&A transactions.

Antonis’ clientele and mandates are diverse, including distressed asset investors, financial institutions and NPL managers. It also serves customers in industries such as manufacturing, defense, energy and construction, retail, food and beverage. He was one of the few insolvency experts commissioned by the Greek government to be part of the ad hoc drafting committee that prepared the new insolvency framework for Greece.

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