Pre-Pack Administration in Greece

Pre-pack administration in Greece is a structured insolvency mechanism that allows a distressed business to negotiate and agree the terms of a sale or restructuring before formal insolvency proceedings are opened, then execute that agreement immediately upon appointment of an administrator. The Greek insolvency framework, substantially reformed through Law 4738/2020 (the Insolvency Code), introduced and codified tools that make pre-packaged transactions legally viable and commercially predictable. For creditors, the mechanism offers faster recovery and reduced value erosion; for debtors and their shareholders, it can preserve the going-concern value of a business that would otherwise be destroyed in a prolonged liquidation. This guide explains how pre-pack administration works in Greece, the legal basis for the procedure, the roles of courts and insolvency practitioners, typical timelines and costs, and the practical considerations that determine whether a pre-pack is the right tool for a given situation.

Pre-pack administration is not a single statutory procedure with that exact name in Greek law. Instead, it is a transaction structure built on top of the formal insolvency tools provided by the Greek Insolvency Code. The core idea is that the key commercial terms - who buys the business or assets, at what price, and on what conditions - are agreed before the court opens proceedings. Once the court appoints an administrator or approves the opening of the relevant procedure, the pre-negotiated deal closes rapidly, often within days.

In Greece, the mechanism most commonly used as the vehicle for a pre-pack is the sale of the debtor';s business as a going concern under the supervision of an insolvency administrator, or the use of the restructuring plan (ptochefseos schedio) framework under Law 4738/2020. The law explicitly permits the sale of the debtor';s enterprise or distinct business units as a going concern, preserving employment contracts, supplier relationships, and operational licences where possible. This is the functional equivalent of what practitioners in other European jurisdictions call a pre-pack sale.

A critical distinction in Greek practice is between a pre-pack that is purely a sale of assets or the business, and a pre-pack that is embedded in a restructuring plan approved by creditors and confirmed by the court. The former is faster and simpler; the latter provides greater legal certainty and binding effect on dissenting creditors. Choosing the right structure depends on the complexity of the creditor base, the nature of the assets, and the urgency of the transaction.

The Greek Insolvency Code, enacted as Law 4738/2020 and subsequently amended, is the primary legal instrument governing all insolvency and restructuring proceedings in Greece. It transposed the EU Directive 2019/1023 on preventive restructuring frameworks into Greek law and introduced a modern, court-supervised restructuring architecture that is broadly compatible with pre-pack techniques.

Several provisions of Law 4738/2020 are directly relevant to pre-pack transactions. Article 76 and the surrounding provisions govern the sale of the debtor';s business as a going concern during insolvency proceedings. The law requires that such a sale be conducted in a manner that maximises recovery for creditors, which in practice means that even a pre-negotiated deal must be tested against the market - typically through a brief competitive process or a fairness opinion from an independent expert. The court retains supervisory authority and must approve the sale.

The preventive restructuring framework under Part B of Law 4738/2020 allows a debtor that is not yet insolvent but faces financial difficulty to negotiate a restructuring plan with creditors. If the plan is approved by the required majority of creditors (generally more than half by value in each class, with specific thresholds depending on the class) and confirmed by the court, it binds all creditors including dissenters. A pre-pack can be structured within this framework: the plan is negotiated privately, then filed and confirmed through an expedited court process.

The Special Administration procedure (Eidiki Dioikisi), originally introduced for credit institutions and later extended to other sectors, also provides a pre-pack-compatible mechanism for certain regulated entities. Practitioners should verify whether a specific debtor falls within the scope of sector-specific rules that may modify or supplement the general insolvency framework.

Greek law also requires that insolvency practitioners appointed in these proceedings are licensed under the Registry of Insolvency Practitioners maintained by the Ministry of Justice. The administrator plays a central role in validating the pre-pack transaction, managing the competitive process where required, and reporting to the court.

A pre-pack transaction in Greece typically unfolds in three broad phases: the pre-filing phase, the filing and court phase, and the post-appointment execution phase.

The pre-filing phase is where the commercial substance of the deal is created. The debtor, usually advised by restructuring counsel and financial advisers, identifies potential acquirers or restructuring partners and conducts confidential negotiations. A data room is established, due diligence is conducted under non-disclosure agreements, and heads of terms or a binding sale and purchase agreement (SPA) is negotiated. During this phase, the debtor must be careful to manage its obligations to existing creditors and avoid transactions that could later be challenged as fraudulent or preferential under the avoidance provisions of Law 4738/2020.

A common mistake at this stage is failing to engage key secured creditors - typically banks or bond trustees - early enough. In Greece, secured creditors hold significant leverage because their consent is often required for a going-concern sale to proceed smoothly, particularly where assets are subject to registered charges (hypothecs or pledges). Engaging them late creates the risk that they will block or delay the transaction.

The filing and court phase begins when the debtor files a petition with the competent Multi-Member Court of First Instance (Polymeles Protodikio) in the district where the debtor has its registered seat. Greece has a specialised insolvency court jurisdiction: the Athens Multi-Member Court of First Instance handles the largest and most complex cases. The petition must include the debtor';s financial statements, a list of creditors, a description of the proposed transaction, and - where a restructuring plan is used - the full text of the plan with supporting financial analysis.

The court will appoint an insolvency administrator (diacheiristis aferengiotitas) and may impose a moratorium on enforcement actions by creditors. The moratorium is a critical protective measure: it prevents secured and unsecured creditors from seizing assets or enforcing judgments while the pre-pack is being executed. Under Law 4738/2020, the moratorium can be granted on an interim basis within a matter of days of filing, which is essential to the speed of a pre-pack.

The post-appointment execution phase is when the pre-negotiated deal closes. The administrator reviews the transaction, satisfies themselves that it represents the best available outcome for creditors, and - if required by the court - conducts a brief market check. If the deal survives this scrutiny, the administrator executes the SPA, transfers the business or assets to the acquirer, and distributes the proceeds to creditors in the statutory order of priority.

In practice, the entire process from filing to closing can be completed in four to eight weeks for a straightforward going-concern sale, and in three to six months where a full restructuring plan with creditor voting is required. These timelines are significantly shorter than a conventional Greek insolvency liquidation, which can take several years.

The Multi-Member Court of First Instance is the central institutional actor in any Greek pre-pack. It opens proceedings, appoints the administrator, approves the moratorium, and ultimately sanctions the sale or confirms the restructuring plan. The court';s role is supervisory rather than operational: it does not negotiate the deal, but it must be satisfied that the process has been fair and that the outcome is in the interests of creditors as a whole.

The insolvency administrator is the operational pivot of the pre-pack. In the pre-filing phase, the administrator may be involved informally as an adviser, though this raises independence questions that must be managed carefully. Once appointed by the court, the administrator has fiduciary duties to the creditor body as a whole, not to the debtor or any particular creditor. The administrator must assess the pre-negotiated deal, verify that the price is fair, and report to the court. Where the administrator identifies a better offer, they are obliged to pursue it.

Secured creditors - primarily banks holding registered mortgages (hypothecs) over real property or pledges over movable assets and receivables - have a privileged position in Greek insolvency. Their consent to a going-concern sale is commercially important even where it is not strictly legally required, because they can otherwise enforce their security and disrupt the transaction. In practice, a pre-pack that does not have the support of the major secured creditor is very difficult to execute successfully.

Unsecured creditors, including trade creditors and employees with unpaid wages, rank lower in the distribution waterfall. However, employees have specific protections under Greek labour law and EU law: their employment contracts transfer automatically to the acquirer in a going-concern sale under the provisions implementing the EU Acquired Rights Directive (Law 2112/1920 and related instruments), unless the insolvency exception applies. Determining whether the insolvency exception applies in a specific Greek pre-pack is a nuanced legal question that requires careful analysis.

The acquirer in a pre-pack transaction benefits from speed and certainty: they know the terms of the deal before proceedings open and can plan integration immediately. However, the acquirer must conduct thorough due diligence on potential liabilities that may transfer with the business, including tax liabilities, environmental obligations, and pending litigation. Greek law provides some protection against the transfer of pre-existing liabilities in a going-concern sale, but the scope of that protection depends on how the transaction is structured.

If you are advising a client on the acquirer or creditor side of a Greek pre-pack, contact info@vlolawfirm.com. We can help structure the setup correctly the first time.

The cost of a pre-pack transaction in Greece falls into several categories: professional fees, court and registration costs, and the cost of the moratorium period itself in terms of business operations.

Professional fees are typically the largest component. Restructuring lawyers, financial advisers, and insolvency practitioners all charge for their involvement. For a mid-sized Greek business with a complex creditor structure, total professional fees can run from the low hundreds of thousands of euros upward, depending on the complexity of the transaction and the number of parties involved. Simpler transactions involving a single secured creditor and a straightforward asset sale will cost considerably less. State and court fees in Greek insolvency proceedings are set by statute and are generally modest relative to professional fees, though notarial and registration costs for the transfer of real property or registered assets can add meaningfully to the total.

A non-obvious cost is the expense of maintaining business operations during the pre-filing phase. Because the pre-pack is negotiated confidentially, the debtor must continue to pay suppliers, employees, and utilities to preserve the going-concern value that makes the transaction attractive to the acquirer. If the debtor runs out of cash before the deal closes, the pre-pack may fail. Practitioners often arrange bridge financing from the acquirer or a major creditor to cover this gap.

Many foreign founders and acquirers underestimate the importance of Greek-language documentation. All filings with the court must be in Greek, and the administrator';s reports are prepared in Greek. Translation and localisation of transaction documents add time and cost that should be budgeted from the outset.

A practical scenario illustrating the stakes: a manufacturing company with significant real property assets and a workforce of several hundred employees files for insolvency after a period of financial difficulty. A strategic acquirer has conducted due diligence and is prepared to acquire the business as a going concern, preserving most jobs. The pre-pack structure allows the acquirer to close the transaction within six weeks of the court filing, before suppliers lose confidence and key employees resign. Without the pre-pack, a conventional liquidation would have taken years and destroyed most of the going-concern value.

A contrasting scenario: a retail chain with multiple leased premises and a fragmented creditor base attempts a pre-pack but fails to secure the agreement of its largest landlord, who holds a registered pledge over the chain';s inventory. The landlord enforces its security before the moratorium takes effect, disrupting the transaction. This illustrates why early engagement with secured creditors is not optional.

One of the most significant legal risks in any pre-pack is the possibility that the transaction will be challenged after the fact as a fraudulent or preferential transfer. Greek insolvency law, following the EU framework, gives the administrator and creditors the right to challenge transactions entered into by the debtor in the period before insolvency proceedings were opened. The relevant provisions of Law 4738/2020 establish look-back periods during which transactions at an undervalue, transactions with connected parties, and transactions that prefer one creditor over others can be set aside by the court.

For a pre-pack, the key risk is that the pre-negotiated sale price will be challenged as insufficient - that is, that the business was sold at an undervalue to a connected party or a favoured acquirer. This risk is managed by ensuring that the price is independently validated, that the competitive process (even if brief) is documented, and that the administrator';s report clearly explains why the pre-pack represents the best available outcome for creditors.

Greek courts have shown willingness to scrutinise pre-pack transactions carefully, particularly where the acquirer has a pre-existing relationship with the debtor';s management or shareholders. A management buyout structured as a pre-pack is particularly sensitive and requires robust independent validation of the price and process.

The avoidance risk also affects the acquirer: if a pre-pack sale is set aside by the court, the acquirer may be required to return the assets and recover only an unsecured claim against the insolvent estate. This is a significant commercial risk that acquirers must factor into their due diligence and pricing.

Creditors who believe they have been treated unfairly in a pre-pack have the right to challenge the administrator';s actions and the court';s approval of the transaction. In practice, well-structured pre-packs with transparent processes and independent valuations are rarely successfully challenged, but the risk is real and must be managed proactively.

What is the main legal risk for an acquirer in a Greek pre-pack transaction?

The primary risk is that the transaction is subsequently challenged as a sale at an undervalue or a preferential transfer under the avoidance provisions of Law 4738/2020. If a court sets aside the sale, the acquirer may be required to return the assets and will hold only an unsecured claim against the insolvent estate, which is likely to recover only a fraction of the purchase price. This risk is mitigated by obtaining an independent valuation of the business before the transaction closes, ensuring that the competitive process is documented, and structuring the transaction so that the administrator';s approval is clearly on record. Acquirers should also conduct thorough due diligence on the debtor';s transaction history in the period before filing to identify any prior transactions that might complicate the administrator';s position.

How long does a pre-pack administration process typically take in Greece, and what drives the timeline?

A straightforward going-concern sale structured as a pre-pack can be completed in four to eight weeks from the date of court filing. A more complex transaction involving a full restructuring plan with creditor voting typically takes three to six months. The main drivers of timeline are the complexity of the creditor base, the number of asset classes involved, whether regulatory approvals are required for the transfer of licences or permits, and the speed with which the court schedules hearings. Greek courts in major commercial centres generally process insolvency filings more quickly than courts in smaller jurisdictions, but scheduling delays remain a practical risk. Engaging experienced local counsel before filing is the most effective way to compress the timeline.

When is a pre-pack the right choice compared to a conventional restructuring or liquidation in Greece?

A pre-pack is most appropriate when the business has identifiable going-concern value that would be destroyed by a prolonged conventional insolvency process, when there is a credible acquirer or restructuring partner already identified, and when the major secured creditors are broadly supportive of the transaction. It is less suitable when the creditor base is highly fragmented and contentious, when the business has no identifiable going-concern value, or when the debtor';s financial difficulties are primarily operational rather than financial - in which case a conventional restructuring without insolvency proceedings may be more appropriate. A conventional liquidation remains the default where no going-concern value exists and the objective is simply to realise assets and distribute proceeds to creditors.

Pre-pack administration in Greece is a commercially powerful tool for preserving business value in distress situations, but it requires careful legal structuring, early creditor engagement, and robust process documentation to withstand scrutiny. The Greek Insolvency Code provides a workable legal framework, and Greek courts have demonstrated a capacity to process these transactions at the speed required for a pre-pack to succeed. The risks - avoidance challenges, creditor opposition, and operational disruption during the pre-filing phase - are manageable with the right advice and preparation.

VLO Law Firms advises international clients on bankruptcy and insolvency matters in Greece. We can assist with pre-pack transaction structuring, administrator engagement, creditor negotiations, court filings, and due diligence on Greek insolvency risks. To request a consultation, contact: info@vlolawfirm.com