Insolvency law and close-out netting in Greece: A case for legal reform

Abstract

This paper analyses the validity and enforceability of close-out netting under Greek bankruptcy law in the context of financial contracts. It concludes that there is a high legal risk that closeout netting may not be enforceable in the case of bankruptcy of Greek counterparties. Therefore, a legal reform is imperative in order to provide transparency for complex financial products with computerised, almost instant, price adjustments. With a number of EU legal acts on winding-up waiting to be transposed into national law, the legislator should take the opportunity to recognise close-out netting in the context of master agreements with credit institutions.