When a cross-border investor holds meaningful exposure in a Greek operating company facing financial distress, the window for preserving value closes faster than most expect. Insolvency proceedings in Greece can shift rapidly from restructuring to liquidation – and once that shift occurs, recovery prospects for unsecured creditors diminish sharply.
This case study examines how Ferraz & Whitmore supported a European holding company through corporate restructuring in Greece involving multiple creditor classes. The engagement centred on coordinating a restructuring plan under Greek insolvency legislation, managing the proof of debt process across creditors, and securing a sustainable outcome before the matter escalated to full insolvency proceedings. The restructuring was completed within approximately eight months of instruction.
The sections below outline the client background, the legal strategy adopted, key milestones and complications encountered, and three transferable lessons for similar cross-border matters.
Client profile and the challenge
The client was a European holding company with a subsidiary operating in Greece in the distribution sector. The subsidiary had accumulated obligations to three distinct creditor groups: a secured lending bank, a cluster of trade creditors, and two foreign-domiciled intercompany lenders.
Each creditor group held different legal standing under Greek insolvency legislation. The secured bank had enecyro (security interest) over the company's principal assets. Trade creditors were unsecured. The intercompany lenders occupied a subordinated position that Greek courts have historically treated with scrutiny in restructuring contexts.
The core challenge was not simply financial. It was procedural. Greek corporate legislation governing restructuring requires creditor coordination through formal channels – including a creditors meeting – and any restructuring plan must satisfy threshold majorities across creditor classes. Achieving those majorities while managing conflicting creditor interests was the defining task.
The holding company's exposure was substantial. A disorderly liquidation would have destroyed the subsidiary's going-concern value and triggered cross-default provisions in the parent's own financing arrangements. The lost-opportunity risk was concrete: a viable business with recoverable value was at risk of being consumed by procedural failure.
Legal strategy and rationale
The team assessed two primary paths under Greek insolvency law. The first was a pre-insolvency out-of-court workout mechanism available under Greek legislation for eligible debtors. The second was a court-supervised restructuring through the formal insolvency proceedings track.
The out-of-court mechanism offered speed and confidentiality. However, it required unanimous creditor consent – an unrealistic threshold given the divergent positions of the three creditor groups. The formal restructuring track allowed a court-confirmed restructuring plan to bind dissenting minority creditors, provided the plan met the required class-by-class voting thresholds.
The decision to proceed via formal insolvency proceedings was driven by one factor above all others: the need to bind the dissenting intercompany lenders. Those lenders, while related-party entities, had separate legal interests and would not consent voluntarily to the terms required for viability.
An síndikos (administrator) was appointed by the court to supervise the process. The firm worked alongside the administrator to prepare the restructuring plan, coordinate the proof of debt submissions from each creditor, and manage the creditors meeting agenda. For a comparative view of how similar considerations arise in another EU civil law jurisdiction, the firm's approach to corporate restructuring in Portugal illustrates the structural parallels and key divergences between the two systems.
Key milestones and complications
The engagement proceeded through four principal phases over eight months.
Phase 1 – Creditor mapping and proof of debt: All creditors were required to submit proof of debt within the statutory period set by the court. A significant complication arose here. One trade creditor had assigned its receivable to a third-party debt purchaser without notifying the debtor. The assignment was valid under Greek civil law, but the debt purchaser had not yet registered its claim. The firm coordinated with local Greek counsel to resolve the standing issue before the creditors meeting, avoiding a challenge that could have invalidated the creditor class vote.
Phase 2 – Restructuring plan drafting: The restructuring plan proposed a combination of debt rescheduling for the secured bank, partial write-down for trade creditors, and full subordination of the intercompany lenders pending return to solvency. Greek insolvency legislation permits such differentiated treatment across classes, provided each class receives treatment no worse than it would under liquidation – the so-called best-interest-of-creditors test. Demonstrating this required a detailed liquidation analysis prepared by an independent valuer.
Phase 3 – Creditors meeting: The creditors meeting was convened under court supervision. The secured bank voted in favour. The trade creditor class reached the required threshold after the debt purchaser issue was resolved. The intercompany lenders voted against – but their dissent was overridden by the court under the cross-class cram-down mechanism available in Greek restructuring law. This mechanism, influenced by the EU Restructuring Directive transposed into Greek legislation, allows courts to confirm a plan over a dissenting class if specific conditions are satisfied.
Phase 4 – Plan confirmation and exit: The court confirmed the restructuring plan approximately six weeks after the creditors meeting. The administrator remained in post for a supervisory period of three months to oversee initial compliance. The subsidiary resumed normal operations under the restructured obligations.
A secondary complication arose mid-process. One trade creditor filed a challenge to the administrator's valuation of certain fixed assets, alleging undervaluation. The challenge was addressed through a supplementary expert report. The delay added approximately three weeks to the overall timeline but did not derail confirmation.
To discuss a restructuring situation with a similar multi-creditor profile, contact us at info@ferrazwhitmore.com.
Transferable lessons for cross-border restructuring matters
Lesson 1 – Map creditor standing before filing, not after. The debt purchaser complication in this matter arose from a private assignment that the debtor's management was unaware of. In cross-border restructuring cases, trade receivables are frequently assigned or pledged as collateral. A thorough creditor mapping exercise – conducted before insolvency proceedings are opened – prevents standing disputes from contaminating class votes at the creditors meeting. This is especially important in Greece, where procedural timelines are strict and late-stage creditor additions face significant hurdles.
Lesson 2 – The liquidation analysis is not a formality. The best-interest-of-creditors test is the central battleground in Greek restructuring plan confirmations. Creditors who oppose the plan will challenge the liquidation analysis. Commissioning a thorough, independently prepared valuation early – and stress-testing it against creditor objections – is essential. A weak liquidation analysis creates leverage for dissenting creditors and risks plan rejection.
Lesson 3 – Related-party creditors require explicit strategy. Intercompany lenders are treated with particular scrutiny by Greek courts. Their claims are valid, but their voting power can be challenged, their treatment in the plan will be examined closely, and courts will assess whether their presence in the creditor pool reflects genuine arm's-length obligations. Structuring the plan to address this scrutiny proactively – rather than reactively – avoids delays at the confirmation stage.
For those managing corporate disputes in Greece alongside a restructuring process, the intersection of litigation risk and insolvency proceedings requires careful sequencing. Claims being litigated at the time of restructuring may need to be provisionally valued and admitted to the creditor pool under reservation – a process that demands close coordination between insolvency and disputes counsel.
To explore how these lessons apply to your cross-border restructuring situation in Greece, schedule a consultation at info@ferrazwhitmore.com.
About Ferraz & Whitmore
Ferraz & Whitmore is an international law firm based in Lisbon, advising business clients across 46 jurisdictions. Our insolvency and restructuring practice covers corporate restructuring, multi-creditor coordination, and cross-border insolvency proceedings across both civil law and common law systems. We have supported holding companies, institutional investors, and in-house legal teams through restructuring processes in Greece, Portugal, and across the EU. combining Portuguese civil law expertise with English common law tradition to deliver results-oriented counsel. As an international law firm in Greece advising on insolvency and restructuring matters, we work with clients who need a single team to manage procedural, strategic, and cross-border dimensions simultaneously. The firm's restructuring practice includes practitioners with experience before Greek courts and EU-level restructuring bodies. Engaging a lawyer in Greece with cross-border restructuring experience from the outset – before insolvency proceedings are formally opened – consistently produces better outcomes than reactive instruction after the process has begun. To discuss your matter, contact us at info@ferrazwhitmore.com.
Disclaimer: This publication is provided for informational purposes only and does not constitute legal advice. The information herein should not be relied upon as a substitute for professional legal counsel tailored to your specific circumstances. Ferraz & Whitmore assumes no liability for actions taken or not taken based on the contents of this material. For advice regarding your particular situation, please contact info@ferrazwhitmore.com.