Debt Discharge in Bankruptcy and the Second Chance – A Return to Economic Activity
The institution of debt discharge in bankruptcy, along with the mechanism of preventive restructuring, forms the foundation of modern Greek insolvency law, as reformed by Law 4738/2020 (Insolvency Code). Following EU Recommendation 2019/1023, the Greek legislator significantly shifted the philosophy of bankruptcy—from a punitive process to a tool for financial restart. This new framework has reshaped the landscape of debt relief in Greece, especially for individual debtors seeking legal and sustainable solutions
Debt Relief in Greece under Law 4738/2020: Discharge through Bankruptcy
Under Articles 192 and following, an individual debtor who has been declared bankrupt may, under certain conditions, be discharged from their debts. Discharge is no longer tied to the formal closure of bankruptcy but stands as a distinct legal process. It allows the debtor to permanently erase obligations owed to private parties, banks, and the state, provided that:
- They acted without fraud or gross negligence
- They cooperated with the bankruptcy administrator and court
- They complied with the relevant deadlines and procedures
Discharge occurs either three years after the declaration of bankruptcy or earlier in cases of small-scale bankruptcies.
This marks a fundamental shift in approach: a debtor who has acted in good faith deserves a second chance—something previously absent in Greek insolvency law.
Preventive Restructuring: Saving the Business Before It Fails
The Insolvency Code also introduces preventive restructuring as an independent rehabilitation process that can be initiated before insolvency. Its main objectives are:
- Suspension of enforcement actions
- Agreement with a majority of creditors (2/3 per class)
- Judicial ratification of the restructuring plan
- Strategic preservation of business value, without full liquidation
This process may also include partial debt forgiveness, loan restructuring, or even the transfer of the business to a new entity. Importantly, legal protection is offered to managers against civil and criminal liability, provided they acted in good faith.
From Insolvency to Restart
Modern legislation no longer views the debtor as “failed,” but as someone entitled to return to productive life. At the core of the new insolvency law is the excusable debtor: one who, without deceit and with full transparency, could not meet their obligations.
Our Approach
At Papatriantafyllou & Thanasenari, we represent individuals and businesses navigating complex financial distress or seeking strategic restructuring. Our experience in preventive restructuring, bankruptcy proceedings, and financial criminal liability enables us to handle every case with precision, discretion, and a focus on each client’s real needs.
We do not treat bankruptcy as a dead end, but as an institutional path toward economic restart. For the excusable debtor, debt discharge is not a favor. It is the next logical step—grounded in justice, integrity, and reintegration into economic life.
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Disclaimer: This publication is intended for informational purposes only and does not constitute legal advice. Professional legal guidance should always be sought before acting on any information contained herein.