Executory contracts in insolvency: The Greek perspective

Abstract

The Greek Insolvency Law system has faced many amendments during the last 15 years, a period characterized by a severe financial crisis that affected both public and private finances. This is particularly true for the treatment of executory contracts by Greek law, which has seen many recent changes. Since 2020, Greece has introduced a new insolvency law statute, the “Debt Settlement Law”, which includes a permanent “Out-of-Court Workout” mechanism, a pre-insolvency rehabilitation procedure, and the main insolvency procedure, which is open to both businesses and individuals. Courts still play a major role in insolvency proceedings. Between 2015 and 2021, executory contracts were not automatically terminated upon the declaration of insolvency, unless explicitly provided by law or contract. Thus ipso facto clauses were not in principle permissible, apart from explicit provisions of the law. After a recent amendment enacted in 2021, executory contracts are in principle terminated automatically on the 60th day after the declaration of insolvency, unless the insolvency administrator decides differently. Ipso facto clauses are still non-permissible, although special rules apply for certain types of contracts, such as financial contracts or executory contracts of personal character.