The Finance Ministry intends to strengthen the provisions of a new bankruptcy legal framework with an early warning system for identifying companies that are in serious financial distress and whose sustainability is at risk.
The early warning system will be supervised by a public authority that will have access not only to the financial records of enterprises but also to the debts they have to the state and the banks, so as to help them avert bankruptcy. It will comprise five stages, the last of which provides for giving businesspeople who deserve it a second chance to make good.
The system has already been introduced on a trial basis in the context of a European program implemented by the Professional Chamber of Athens that inspected over 1,000 firms. According to the ministry’s plan, the system will be a useful tool for the early diagnosis of problems in an enterprise before it goes under.
The ministry’s plan was presented to the country’s creditors last week and will constitute the central idea of the new legislation on bankruptcy for corporations, based on the European Union directive about insolvency. It will replace the out-of-court settlement mechanism currently in force and will operate in parallel with other procedures already applying by the bankruptcy legislation that will remain in force.