#e-auctions

TIME TO OWN PRIME PROPERTIES IN MAJOR CITIES OF PUNJAB

Amritsar & Jalandhar Development Authorities conduct e-auction Chandigarh, October 7: Jalandhar Development Authority and Amritsar Development Authority are offering prime properties in major cities i.e. Amritsar, Gurdaspur, Batala, Jalandhar, Phagwara, Kapurthala and Sultanpur Lodhi. These urban properties are available for purchase via e-auctions.  Giving details about these properties, an…

All eyes in Athens were on the visit of Turkish Foreign Minister Mevlut Cavusoglu on Monday, but on the domestic front the Greek authorities are preparing for the implementation from Tuesday of the new insolvency framework, which includes an end to the protection of primary residences for most households.

While Cavusoglu’s visit, which included meetings with Prime Minister Kyriakos Mitsotakis and Foreign Minister Nikos Dendias, will grab the headlines, the launch of the new bankruptcy legislation from the start of June is likely to be more significant for the government’s political interests within Greece in the long run.

As of this Tuesday, debtors will be offered settlements of up to 20 years for the amounts owed to tax and social insurance funds and up to 35 years for banks. Their other option will be to agree to their assets being liquidated, setting them on a path to being free of their debts within 36 months.

Any debtor who chooses not to take up either of these two options could be declared bankrupt by his creditors, leading to a loss of assets but also future income. This “second chance” approach is the result of lengthy negotiations between the Greek government and the European institutions, which had been pushing for Athens to adopt new insolvency legislation for some time.

The online platform for applications is due to open on June 1 and the government is presenting this as the most comprehensive scheme there has ever been to settle debts, not just arrears, over a lengthy period. The authorities are also promising an automated system that will deliver outcomes in up to two months.

Clearly, the scheme is even more relevant in the wake of the pandemic’s economic impact but growing private debt has been a problem in Greece for more than a decade. The total owed by the private sector is now close to 250 billion euros, although it is accepted that most of this debt will never be collected. It remains to be seen if the new framework is seen as generous and user-friendly by the public and the media, as the government hopes.

One factor that could work against the scheme’s acceptance is that it coincides with the withdrawal of protection for primary residence protection. Only those households deemed highly vulnerable will now have the option of leasing back their property from a state body and then being given the chance to re-purchase it 12 years later.

The protection of tens of thousands of main homes from foreclosure during the previous crisis inured Greece against a large part of the potential social impact of the economic devastation the country suffered. When the previous SYRIZA administration launched the electronic auction process for repossessed properties, this was met by protests from the radical left and activists.

The local media was also highly critical of the move, even though most of the properties being auctioned were not family homes. It will be interesting to see if the largely New Democracy-friendly mainstream media is equally critical of the current government when households lose primary residences.

Another source of potential friction over the insolvency proceedings is that the trend in many other countries is for the discussion to focus on debt forgiveness in the wake if the Covid-19 crisis. The Greek media, for instance, recently highlighted comments by former Dutch finance minister and ex-Eurogroup president Jeroen Dijsselbloem calling for Dutch businesses to be granted debt write-downs due to the pandemic.

Greece’s creditors do not like debts being settled in many installments, as they view it as damaging to the payment culture. Even now, amid the pandemic, sources say the creditors have informed the government of their position ahead of plans concerning tax dues, with the 10th post-bailout assessment process having started on Tuesday on the mission chief level.

For more than 12 months, the coronavirus has pushed aside the various differences between the two sides, and the government has enjoyed a sequence of positive assessments, promoting any reforms the conjuncture allows for. However, as time passes and the end of the pandemic appears to be coming into sight, the creditors’ requirements are returning and new priorities emerging. Therefore, for instance, the eurozone officials are now placing an emphasis on better targeting of the support measures by the government.

Greece’s creditors insist that online auctions of properties that are not the main residence of debtors need to resume as soon as the lockdown ends.

The view expressed during talks on Tuesday with the government echoed the opinions voiced by the banks and the companies managing bad loans for the funds that have acquired them. Their view is that the horizontal freeze on auctions puts loan securitizations at risk while also raising the possibility of triggering state collateral consequences in the context of the Hercules asset protection scheme.

The government has decided on a horizontal suspension of auctions, regardless of whether the asset liquidations are the outcome of the new economic crisis. The measure is affecting the business plans of the servicers who have undertaken the Hercules-related loans.

The Greek Parliaments has rejected with 158 votes the censure motion against Finance Minister Christos Staikouras over the new bankruptcy law submitted by main opposition party Syriza. With the exception of former Finance Minister Yianis Varoufakis’ MeRA 25, all opposition parties voted with 133 votes in favor of the motion.

MPs of MeRA25 left the plenary before the voting late on Sunday.