Greece launched a new restructuring process for over-indebted enterprises on March 1st, intended to allow both enterprises and the self-employed to settle their debts and continue their business activity. The COVID-19 pandemic has bankrupt businesses across Greece, and many citizens are literally on the financial ropes.
The country’s finance ministry announced last week, a three step restructuring process: first, the drafting of a report by an expert and a plan on the restructuring of debt; second, evaluation of the expert’s report and approval of the restructuring plan by creditors; and third, ratification of the restructuring deal by the court.
Furthermore, should an enterprise faces non-reversible sustainability problems and cannot be included in the restructuring process, then it will have to follow the second-chance process leading to a full write-off of debt and the liquidation of its assets. While the purpose here seems a bit unclear, somehow I see thousands of businesses being sold off at pennies on the euro in the future. But, maybe I am jumping the gun.
At the onset of the pandemic and ensuing lockdowns, Greece announced tax breaks and economic assistance to thousands of businesses and workers in order to bolster the economy in the wake of the necessary pandemic response. These seem to have provided a bit of a cushion for larger businesses, but families with restaurants or even bed and breakfast operations would certainly starve without the help of their extended network of friends and family. In other words, the mom and pop operations are on the brink of the abyss.
Fast forward, and we see one hard-hit sector, Greece’s food and beverages (F&B) operators suffering a massive shock in 2020 due to Covid-19 lockdown measures. Hundreds of thousands have been negatively affected, and our sources say the government’s programs come nowhere near rescuing the biggest portion of owners and workers. In protest, members of the Panhellenic Federation of Restaurants and Related Professions (POESE) handed over the keys to their restaurants last week to Greek Prime Minister Kyriakos Mitsotakis in protest.
POESE is calling for working capital to help restart operations; subsidies supporting employment and 100 percent coverage of social insurance contributions for six months after restart, but more immediate help is needed to help operators and their families survive this latest lockdown. A taverna owner we spoke with last week, who asked to remain anonymous, says repeated requests by him to receive some form of help were not only turned down, he says no reason for the denials was given either. Another businessman we talked to, said he stopped bothering to request help weeks ago.
Some 80,000 restaurants and cafes in Greece, which employ about 350,000 people, have been closed since September and have been allowed to offer only delivery and take away services since. Many of these are already out of business, and the situation in villages is far worse than in the cities, where delivery is even an option.
To give you an idea, Giannis Chatzitheodosiou, president of the Athens Chamber of Tradesmen, told Kathimerini last week that 45% of the restaurants in Athens will never reopen. And the families connected to these businesses are already devastated. One prominent taverna owner we spoke with said the government’s program excluded him because he was forced to work in the olive groves just to make subsistence for his family.
For these Greeks, the situation is not just a tragedy, it also frames the deplorable situation in the state. The PR from Athens clearly shows one reality, while on the streets and in the villages the lifeblood of the country bleeds out over COVID.
To be continued….
Photo credit: Naxos taverna by Marco Verch from this past summer.