“Restructuring banking debts through Mediation”. Article published by Spyros Antonelos, RESOLVE Mediators Partner.

Restructuring banking debts through Mediation: a quick process to the benefit of both debtors and banks.

 

By Spyros Antonelos Lawyer, Accredited Mediator, Trainer, Author, RESOLVE Mediators Partner.

Published on the 16th of September 2018 at the Newspaper «ΠΑΡΟΝ της Κυριακής».

Mediation, which is an assisted confidential negotiation process applicable by Greek law to most private disputes offers an exciting potential in banking disputes: it is a quick way for debtors to request from banks the restructuring of their debts and, if the latter consent, negotiate with them and reach a binding result. Once restructured, debts are requalified by Banks from NPEs/NPLs to performing loans. Debtors are no longer blocked from financing; provided they observe the restructuring agreement terms, they gradually recover access to banking products and to liquidity.

In the recent years Greek banks have invited debtors through TV ads to renegotiate their debts with them. In some cases, this renegotiation platform was successful; in other ones it proved to be impersonal, lengthy, uncertain and in the end ineffective. Was there an alternative? Yes, Mediation was the alternative provided by Greek Law number 4512/2018.

Mediation, as defined in the said Law, is an out-of-court private dispute resolution process; banking disputes generated by debts are included in its scope. In this process debtors, accompanied by their lawyers (lawyers’ participation in mediation being mandatory in Greece) and banks accompanied by their legal counsel, are equally assisted by an accredited mediator in negotiating and reaching a mutually accepted solution. Mediators are neutral professionals, trained in negotiations, psychology and law, chosen by both sides from a Ministry of Justice public list.

During the negotiation parties discuss directly with each other and seek a solution that they can both live with, adapted to their capabilities and needs. Mediation can be initiated at any stage of a dispute between banks and debtors, even after the initiation of judicial proceedings or before enforcement proceedings as long as parties agree to come to the mediation table: the process is voluntary and one of mediator’s crucial contributions to the process often is to assist them in pondering their options and making an informed decision to resort to mediation.

Mediation is quick and flexible. It is also confidential and process participants, in case it fails, cannot testify in court over its content and the information exchanged. Its preparatory steps and its implementation last a few days or a few weeks depending on parties willingness to proceed quickly. The shortest mediation I was involved in, within a more-than-10-year mediator’s career, lasted only 5 days in total; this included all steps, from preparation to mediation session, the conclusion of a binding settlement agreement and the court recording of the agreement in a registry so as for it to become enforceable under Greek Law.

During all process steps the mediator assists parties in an even-handed manner, advising them on how to both make the most of the process advantages. That is the only form of advice he/she can provide, given his/her neutrality. The settlement agreement reached has the enforceability of a court decision provided it is recorded in a court registry, through a simple and quick additional process, usually lasting a few minutes; it can take place whenever in the future parties and their lawyers wish to make use of it. Most of the time, provided parties abide by their agreement, it is not used at all.

In the case of banking disputes between debtors and banks, mediation serves as an “express” debt restructuring and return to normality process for all parties. Some Greek banks are already using mediation systematically, while others are examining the possibility to follow their example. After experiencing mediation for the first time, most debtors, lawyers and bank executives express their satisfaction over the advantages and the flexibility of the process.

Allow me to conclude this article with a very practical question: How can a lawyer representing a debtor or a debtor himself/herself get more information about Mediation? The answer is: contact a well-organized Mediation Center, such as the Athens Chamber of Small and Medium Enterprises one (contact details: www.diam-acsmi.gr – phone: 210.36.80.733 – 210.3680736), where banking disputes have been regularly mediated in the recent years. You can also contact an Accredited Mediator of your choice from the public accredited mediators list kept by the Greek Ministry of Justice. Like for every other scientific knowledge, the best reliable information source are its most experienced specialists.

Mediation does not hinder one’s constitutional right to resort to Greek courts: in the few cases (less than 20%) where no settlement agreement is reached in mediation, both banks and debtors resort to courts for the judicial resolution of their dispute.