Out-of-Court Resolution of High-Value Debt in Asset Deal
Papatriantafyllou & Thanasenari recently achieved a significant out-of-court settlement in a complex commercial dispute involving a business transfer, securing the recognition and payment of a €650,000 debt by the acquiring company. Our client had delivered goods on credit to a company that later transferred its operations to a new legal entity through an asset deal, leaving the original debt unpaid.
Case Background
The new entity continued operating in the same location, under the same commercial identity, and offered the same products and services. However, it denied any liability for the obligations of the seller, citing its legal independence.
This left our client in a vulnerable position: the selling company had ceased operations entirely, and the buyer persistently refused to acknowledge any liability for the outstanding debt of €650,000.
Our Legal Strategy
We initiated legal proceedings against both the transferring and the acquiring company. Our legal argument was based on Greek Civil Code provisions on business transfers, combined with case law addressing similar scenarios.
We presented evidence of the substantial continuity between the two businesses — same premises, same clientele, and same line of activity. Based on these facts, we established that the transaction amounted to a de facto transfer of business (asset deal), making both companies jointly liable for the commercial debt.
Negotiation and Settlement
Following the formal service of our lawsuit, the defendants — for the first time — approached our client willing to negotiate. Throughout the negotiations, we emphasized the legal strength of our client’s position and the litigation risks faced by the defendants.
Successful Outcome
Prior to trial, both companies formally recognized the debt out of court and entered into a settlement agreement. Our client was fully compensated without the need for a court judgment.
Significance of the Case
This case highlights the power of a well-prepared legal action in protecting creditors’ rights in business transfer scenarios. Here, the mere filing of a fact-driven and legally sound claim triggered a favorable settlement — avoiding lengthy litigation.
It also serves as a reminder that substance prevails over form: when there is real economic continuity between the old and new entity, the acquiring company cannot hide behind formal separateness to escape liability.
Proactive and strategic legal action can safeguard creditor rights — even in complex asset deals — without the need for a final court ruling.
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