When a business runs into serious financial difficulty, the question is not only what lies ahead for the company, but also for the person at its helm. In the fourth episode of the vidcast ‘Case Closed’, Giorgos Psarakis and Giorgos Kefalas examine what bankruptcy means in practice, which debts may become the legal representative's personal responsibility, and where that responsibility ends.
Bankruptcy is often seen as the end of the road for a business. But, as the two lawyers' discussion highlights, it is not the only option available, nor is it always the most appropriate one. The Out-of-Court Mechanism and restructuring proceedings offer alternative routes, and the right choice depends on the company's specific circumstances and when the decision is made.
At the heart of the episode is the position of the legal representative. When can a company be declared bankrupt, and what happens to its assets? Which corporate debts can become the manager's personal liability? And what happens if they have signed as guarantor for a business loan?
Particular attention is paid to the so-called ‘second chance’ under Article 195 of the Bankruptcy Code, how discharge from debts works, and the circumstances in which it may be challenged. The two lawyers also answer a question that concerns many business owners: is resigning from management enough to be released from pre-existing debts?
Drawing on practical examples and references to well-known corporate bankruptcies as reported in the press, the episode sheds light on the decisions a company representative must make when finances take a turn for the worse, as well as the limits of their personal liability.
*The cases mentioned in the vidcast have not been handled by the law firm of Psarakis & Kefalas. The relevant information comes exclusively from press reports.