Preventive Restructuring vs. Rehabilitation — Creditors’ Options

Law 4738/2020 provides a coherent framework of tools covering all stages of insolvency, from prevention to resolution. Among its numerous provisions, particular prominence is given to the out-of-court debt settlement mechanism and the business rehabilitation procedure.

The two procedures pursue different objectives. The out-of-court mechanism, which is available to both legal entities and individuals, whether engaged in business activities or not, aims to restructure debts. The debtor receives a repayment plan generated by the statutory calculation tool, based on their repayment capacity as determined by their income and assets. Rehabilitation, by contrast, is available only to individuals or legal entities engaged in business activities and aims to reorganise the business and restore its viability. An agreement with the majority of creditors therefore produces a solution tailored to the circumstances of the particular case.