The Xanthi Justice of the Peace, on a case that our office successfully handled, with case no. 155/2024 Decision rejected the appeal of the opposing party EFKA against the discharge of our principal, in accordance with the provisions of the Bankruptcy Law (Law 4738/2020).
In particular, the Court, accepting our claims, ruled, among other things, that:
“The late filing of a bankruptcy petition alone is not sufficient to consider that this delay was culpable. Furthermore, in the present case, the applicant does not mention any additional element that would establish any fault on the part of the poor person or that the delay in filing the bankruptcy application was for the benefit of the poor person and to the detriment of the creditors, therefore this claim should also be rejected as essentially unfounded […..] In light of all the above, the present appeal must be rejected in its entirety as essentially unfounded and the applicant must be ordered to pay the defendant's legal costs due to his defeat.
Next is the no. 155/2024 Decision of the Xanthi Magistrate's Court
NUMBER 155/2024
THE JUSTICE OF THE PEACE OF XANTHI
PROCEDURE: Voluntary jurisdiction
CONFERRED by the Justice of the Peace of Xanthi, Ekaterini Kazoli, in the presence of the Secretary…
SAID publicly in its audience on April 15, 2024 to try the following case:
Applicant: Of the Public Legal Entity with the name "Electronic National Social Security Agency (6- EFKA)", ………, which was represented by the power of attorney of ………, who filed a written memorandum of proposals with the court.
Defendant: …………., as a natural person with bankruptcy capacity, for debts arising from personal insurance as a self-employed person and as a member of …………. who appeared inby the attorney-in-fact of lawyer Kalokyris Thomas (District Court of Thessaloniki 11982), who submitted a written memorandum of proposals to the court.
The applicant Public Legal Entity requests that its appeal dated 30-10-2023, which was filed with the Secretariat of this Court, with the filing report number …../2023, be accepted, the hearing of which was determined for the hearing indicated at the beginning of this document.
During the presentation of the case in turn from the relevant board and during its discussion, the attorney-at-law of the applicant N.P.D.C. requested that what was stated in the minutes of the public hearing and in the written proposals she submitted be accepted.
AFTER STUDYING THE LITIGATION
THOUGHT ACCORDING TO THE LAW
According to the provision of article 192, paragraph 1 of Law 4738/2020, “Without prejudice to paragraph 2, the debtor - natural person is fully exempted from any debt to the bankruptcy creditors, regardless of whether they have been declared or not, thirty-six (36) months from the date of the declaration of bankruptcy or the registration of paragraph 4 of article 77, unless an appeal is filed within the above period by anyone with a legitimate interest against his exemption. The exemption also results in the cessation of the deprivation of rights entailed by bankruptcy”, while paragraphs 1, 2 and 3 of article 193 of the same aforementioned law provide for the possibility of appealing against the automatic exemption of the debtor and in particular in paragraph 1, as replaced by article 35, paragraph 21 of Law 4818/2021, it is provided that “1. The appeal against the discharge is admissible in the bankruptcy court if the applicant claims that the inability to fulfill the obligation established by the decision declaring bankruptcy is due to fraudulent actions of the debtor or that the debtor did not demonstrate good faith either at the time of the declaration of bankruptcy or during it, has not cooperated with the bankruptcy authorities, has fraudulently concealed income or assets during the bankruptcy proceedings or that either criminal proceedings are pending against the debtor for any of the acts of Part Nine of Book Two or for any of the felony acts of theft, fraud, embezzlement or forgery, or for the offense of defrauding creditors or that he has been convicted of any of these acts, in par. 2 states that “In the event of an appeal, the bankruptcy court, following a relevant report by the rapporteur, in which any observations of the debtor and the creditors are recorded, and after hearing the trustee, decides on the discharge. If the bankruptcy court considers that the conditions for discharge are not met, it may, by reasoned decision, set a deadline for the debtor to satisfy them, limit the discharge to certain debts only or set an exceptionally longer discharge deadline, providing in each case due justification for any deviations from the general discharge deadline provided for in paragraph 1 of article 192” and in paragraph 3 it is provided that “If the appeal invokes criminal prosecution or conviction for any of the acts of paragraph 1, the bankruptcy court may postpone its decision until the irrevocable conclusion of the criminal proceedings". Subsequently, the provision of article 194 of Law 4738/2020 stipulates that "1. The debtor is not exempt from debts that arose after the submission of the bankruptcy application (in the case of debts to the State, the relevant time is the time to which the obligation relates and not the time of creation of the legal title) and debts resulting from fraud or gross negligence, which caused death or bodily harm to a person, debts from the offenses of Law 4557/2018 and maintenance debts" and "2. In the event that, after the discharge of a debtor, it is proven that he fraudulently or through gross negligence omitted to disclose his financial and property situation during the bankruptcy proceedings or did not comply with his obligations in accordance with the payment plan of paragraph 2 of article 92, the bankruptcy court, within three years from the date of the discharge, may, upon a creditor's request, revoke the discharge in whole or in part or set conditions for the discharge, such as the repayment of the debts due under the payment plan. Furthermore, the provision of article 195 of Law 4738/2020 provides for the discharge of representatives of legal entities, namely mainly companies, from debts for which they are jointly and severally liable by law, and specifically in paragraph 1, as amended by article 35 paragraph 23 of Law 4818/2021, stipulates that "1. A natural person who by law has joint and several liability due to his representative or administrative relationship with a debtor legal person, is exempted from any liability for debts of the debtor, which arose within the suspicious period or within the thirty-six (36) months preceding the suspicious period, upon the lapse of thirty-six (36) months from the submission of the bankruptcy application, or twenty-four (24) months from the declaration of bankruptcy or the registration of par. 4 of article 77, whichever is earlier, unless an appeal is filed within the above deadline by anyone with a legitimate interest against his exemption. Suspicious period means the period defined in article 116 or the presumed suspicious period of the second paragraph of paragraph 2 of article 81 in the event of registration of paragraph 4 of article 77, as the case may be”, while paragraph 2 provides that “2. In the event of an appeal, the bankruptcy court, assessing the causes and circumstances of the bankruptcy, following a relevant report by the rapporteur, in which any observations of the debtor and the creditors are also registered, and after hearing the trustee, shall rule in favor of the discharge, if the natural person demonstrates good faith both at the time of the declaration of bankruptcy and during it, is cooperative with the bankruptcy authorities, is not liable for an act or omission of article 127 and the bankruptcy is not due to fraudulent actions on his part. Those convicted of any of the acts of Part Nine of Book Two of this Code or of any of the felonies of theft, fraud, embezzlement or forgery of the Criminal Code are not fully exempted. If there is a pending criminal prosecution or civil action for any of these acts or omissions, the bankruptcy court may postpone its decision until the irrevocable conclusion of the procedure. The decision is revoked if a change in circumstances occurs that justifies the revocation within three years of the date of the exemption. "Finally, according to article 263 of Law 4738/2020, as amended by article 38 par. 4 of Law 4818/2021 "Articles 195 and 196 shall also apply to the discharge of representatives of a legal person for debts of a legal person whose bankruptcy application or declaration of bankruptcy preceded the entry into force of this law or whose application was rejected, in accordance with par. 4 of article 3 of Law 3588/2007. In the event that the deadline relating to the discharge of representatives of par. 1 of article 195 expires at any time before 31.12.2021, then the discharge shall take place on 1the.1.2022, while any appeal may be filed until 31.12.2021". The appeal in question means the application or action to challenge the legal presumption in favor of the debtor, poor, but latent - indirectly, inferred - that the debtor, poor, having fallen into a state of inability to pay, without malice and without being burdened with prosecution or conviction for committing financial crimes, demonstrated, during the following procedure, good faith and willingness to cooperate, also presenting all his assets. With his appeal, therefore, the appellant, who has a legitimate interest in this regard (creditor, trustee, and the Prosecutor), must allege and prove the opposite of the above, overturning the presumption and requesting the bankruptcy court hearing the case, before which he is filing his appeal, to recognize the impossibility of obtaining the exemption for this reason, which the law provides as an automatic consequence of the mere passage of the specified deadline. On this appeal, the Bankruptcy Court, assessing the causes and circumstances of the bankruptcy, following a relevant report by the rapporteur, in which any observations of the debtor and the creditors must have been recorded, and after hearing the trustee, decides in favor of the discharge, if the natural person (representative): a) has demonstrated good faith, both at the time of the declaration of bankruptcy and during it, b) has been and is cooperative with the bankruptcy bodies, c) is not burdened with acts or omissions that caused or delayed the bankruptcy (art. 127 of the Civil Code) and d) the bankruptcy is not due to fraudulent actions on his part. As regards the provision provided for in article 195 of Law. 4738/2020 exemption of the representatives of the legal person from their joint and several liability towards the legal person, for debts of the latter towards third parties, which they themselves created with their action, within the suspicious period or the previous 36 months, this exemption concerns natural persons who are managers, i.e. representatives or members of the administrative body of a legal person or the single-member administrative body. These persons bear joint and several liability towards the legal person towards the public, for the payment of debts, income tax, interest and fines, and for the return of withheld and non-withheld taxes, VAT. and all applicable taxes, regardless of the time of their certification, as well as for debts of the legal entity represented by them to the Social Security Institutions (see Psychomani S., Bankruptcy Law, 9th edition, 2021, p. 572 et seq.).
In the present case, with its appeal under consideration, the applicant N.P.D. states that by virtue of the decision no. …… of this Court, adjudicating under the voluntary jurisdiction procedure, …… was declared bankrupt. That by the order no. ……… of the Bankruptcy Rapporteur of the Xanthi Court of Justice, the registration of the order and the name of the applicant for bankruptcy in the Electronic Solvency Register was ordered. That the defendant created debts as a self-employed person, totaling 83,341.66 euros. That the defendant was a member of the family business ………….., whose total debt amounts to 715,081.74 euros. That the above company, with the number …….. was declared bankrupt. That the defendant did not proceed with any settlement of its debts and that it did not submit a bankruptcy application in a timely manner. Based on this history, the applicant N.P.D.D., invoking a legitimate interest as a creditor of the defendant, requests that this Court rule that the defendant not be relieved of all bankruptcy debts and that it be ordered to pay the plaintiff's legal costs.
With this content and requests, the appeal under consideration, competently, in substance and in place, is introduced for discussion before this Court, in the procedure of voluntary jurisdiction. Furthermore, the appeal under consideration was filed within the time limit, given that it was filed before this Court on , while in addition it is definite and lawful, based on the provisions of articles 192 to 196 and 263 of Law 4738/2020, as amended by the provisions of Law 4818/2021 and in force. Consequently, the appeal under consideration was deemed admissible and lawful in part, and must be further investigated as to its substantive validity.
From all the documents, without exception, legally presented and invoked by the parties, the following facts are proven: By virtue of the decision no. ……. of this Court, adjudicating in the voluntary jurisdiction procedure, …… was declared bankrupt. Furthermore, by the order no. …… of the Bankruptcy Rapporteur of the Xanthi Court of Justice, the registration of the order and the name of the applicant for bankruptcy in the Electronic Solvency Register was ordered. In addition, the defendant created debts as a self-employed person, totaling 83,341.66 euros. At the same time, the defendant was a member of the family business …….. whose total debt amounts to 715,081.74 euros. Furthermore, no evidence submitted by the applicant N.P.D.D. proves that the defendant in the appeal showed bad faith both when declaring bankruptcy and during it, or that he was not cooperative with the bankruptcy authorities or that he is charged with acts or omissions that caused or delayed bankruptcy (art. 127 of the Code of Civil Procedure) or that the bankruptcy is due to his fraudulent actions, i.e. it is not proven at all that the conditions referred to in the provision of article 195, paragraph 2 of Law 4738/2020 are met in this case, in order for this Court to rule in favor of the non-automatic discharge of the above natural person, in accordance with what is understood in the legal reasoning at the beginning of this. As regards the claim raised by the applicant N.P.D.D. that the defendant's automatic discharge from the appeal should not take place, as he did not pay insurance contributions which remain unpaid, this (the claim) is to be rejected as essentially unfounded given that no evidence presented by way of appeal proves that criminal prosecution was brought against the defendant or that he was convicted of a crime for non-payment of insurance contributions. In addition, it has not been proven that the defendant in the appeal has been convicted of any of the offenses of bankruptcy or favorable creditor treatment (art. 197 and 198 of Law 4798/2020) or for any of the felonies of theft, fraud, embezzlement or forgery of the Criminal Code, nor that there is a pending criminal prosecution for any of the aforementioned criminal acts. Furthermore, the late filing of a bankruptcy petition alone is not sufficient to consider that this delay was culpable. Furthermore, in the present case, the applicant does not mention any additional element that would establish any fault on the part of the poor person or that the delay in filing the bankruptcy application was for the benefit of the poor person and to the detriment of the creditors, therefore this claim should also be rejected as essentially unfounded. Finally, the claim raised by the applicant N.P.D.D. regarding the failure to assist the defendant in the appeal of the conditions for his automatic discharge, according to article 195 par. 2 of the Law. 4738/2020, due to his participation in the public limited company ……………, which is in bankruptcy, is likewise dismissed, given that the defendant's participation in the above company alone cannot in any way be linked to the bankruptcy of the above, nor does it constitute a fraudulent act by the defendant. In light of all the foregoing, the appeal under consideration must be dismissed in its entirety as essentially unfounded and the applicant must be ordered to pay the defendant's legal costs due to his defeat.
FOR THOSE REASONS
JUDGING in the presence of the parties
REJECTS the appeal.
CONDEMNS the applicant to pay the defendant's legal costs, the amount of which is set at 168 euros.
It was judged, decided and published in its audience at an extraordinary public meeting in Xanthi on August 19, 2024.
Thomas Steph. Summer
Supreme Court Lawyer
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