1. The document discusses whether secured creditors should be allowed to enforce their security upon the commencement of insolvency proceedings against the debtor or if a temporary stay should apply. 2. It notes that while secured creditors' rights must be protected, insolvency law also aims to maximize the value of assets for all creditors and facilitate equitable distribution. A temporary stay may help achieve these aims if it avoids quick asset sales and allows rehabilitation of the debtor's business. 3. Greek law applies a temporary stay on enforcing security over assets connected to the debtor's business, up to 10 months. This aims to balance protecting secured creditors' rights with other insolvency law objectives like repayment of debt and increased asset value,

1. 1.Enforcingsecurityrights,ClaytonUTZ
2. http://www.echr.coe.int/LibraryDocs/DG2/HRHAND/DG2-EN-HRHAND-10%282007%29.pdf
3. UNCITRAL Guide Legislative Guide onSecuredtransactions
4. UNCITRAL Guide onInsolvency,Recommendation1
Should secured creditors be entitled to enforce security upon the commencement of insolvency
proceedings against the security provider or should a permanent/ temporary stay apply on such
enforcement? Which approach is taken by the legislator in your country of origin?
1..‘A creditor is a secured creditor if it has an interest in nominated property which relates to
payment of a debt or performance of an obligation by the debtor’. According to Art 5 of the
Insolvency Regulation 1346/2000 ‘ The opening of insolvency proceedings shall not affect the
rights in rem of creditors or third parties in respect of tangible or intangible, moveable or
immoveable assets- both specific assets and collections of indefinite assets as a whole which
range from time to time- belonging to the debtor which are situated within the territory of
another member state at the time of the opening of proceedings’. 2.Also Article 1 of the Protocol
1 of the European Convention of Human rights guarantees the right to property. Under the scope
of this article can come also claims that are force able as the term of property is interpreted
broadly. Also one of the purposes of security is the protection of interests of creditors if the
debtor fails to repay the debt. From the above aforementioned we conclude that creditors rights
and particularly secured creditors must be protected. However one may argue that an effective
insolvency law must balance the interests not only of the creditors but of the debtor and other
parties affected by the proceedings. One of the objectives of insolvency law according to the
UNCITRAL Guide is to 3.‘preserve and maximize the value of the debtor’s assets for the
collective benefit of creditors and to facilitate equitable distribution to creditors’. Also other
objectives are to 4..‘provide for timely, efficient and impartial resolution of insolvency’ and to
‘recognize existing creditors rights and establish clear rules for ranking of priority claims’. To
achieve these objectives an imposition of ‘stay’ should apply that prevents the creditors from
enforcing their rights during the liquidation period. This stay is necessary so quick sales of assets
are avoided and the assets are liquidated at their maximum value. However the interests of the
secured creditors must be protected for this is the purpose of providing security and if the
secured creditor were prevented from foreclosing upon its collateral, the price and availability of
credits will increase and creditors will not be willing to provide credit so easily and maybe they
won’t provide at all. Also another reason a stay is necessary is to keep the business of the debtors
in operation so they can be able to repay the debt, as if the creditors enforce their claims
immediately at the commencement of rehabilitation proceedings, the above mentioned will be
impossible.
However any stay on secured creditors must be accompanied by measures that protect the
secured creditors. First of all, the stay must be applied only when it protects the value of the
estate. A brief period must be provided even for secured creditors so the liquidator can assess the
value of the estate. This measure also protects the creditors interests, as protecting the value of
the estate, protects the value of the collateral also.
However, the stay as I mentioned before must not put in stake the creditors interests. To protect
the secured creditors, a measure that can be taken is to give compensation if there is depreciation
of the collateral which might be a result of a stay. Also another measure that can be taken is an
interest payment during the stay but only if the creditor is over secured to the extent that the
value of the collateral exceeds the value of the claim. A third safeguard that can be provided is
paying compensation or providing other substitutes for the collateral in the case of the liquidator
selling the encumbered assets if he decides that selling the assets is benefiting for maximizing

2. the value of the estate. Last but not least, the UNCITRAL Guide on Secured transactions
recommends that a relief should be provided from the stay or a release of the encumbered asset.
This can be provided when the interests of the creditors are not met or the stay is not beneficial
for the estate. The stay should be temporary, so the rights of property of the creditors are not
infringed and extended only if the extension serves the purpose of maximizing the value of the
estate for the benefit of the creditors.
As for Greece, the Greek insolvency code in article 1 states that the declaration of insolvency
aims to satisfy the creditors interests with the liquidation of the estate or with another way which
is mentioned in the rehabilitation plan and especially with the preservation of the business. In
article 112 the code mentions that the rights of secured creditors are not affected by the
insolvency proceedings unless it is mentioned otherwise. Also in Article 26 of the Insolvency
Code paragraph 1, secured creditors benefit exclusively from the liquidation of the estate.
Furthermore, paragraph 3 of article 26 states that from judicial decision that declares the
insolvency, security enforcement upon assets of the debtor that are connected directly with his
business are suspended until the rehabilitation plan is approved or until the decision of the
creditors about how the insolvency proceedings will continue. The stay is temporary and does
not extend more than 10 months and after the 10 months pass the stay is canceled without any
other action. Personal acts of enforcement from secured creditors that infringe the stay are void.
This stay does not extend to assets that are not connected directly to the debtors business.
Another measure is that if secured creditors relinquish of the security rights they have, then they
can be benefited from the whole of the estate. In this case, the stay does not apply. Also
according to paragraph 5 if there is a decision of selling the estate as a whole, there is a stay of
enforcement of the creditors until the termination of this process only when it applies to assets
that are connected to the business of the debtor. The time restriction of ten months in this case
does not apply.
As we can observe in Greek legislation secured creditors rights are protected and have an
advantage. However, a temporary stay applies only to certain assets of the estate, those that are
connected with the debtors business. This serves the purpose of enabling the repayment of the
debt, as if the debtors business continues to function it will be easier to repay the debt, thus
having as a result of protecting not only secured creditors interests but also other creditors and
third parties interests. Also, this measure can increase the value of the estate of the debtor, thus
benefiting not only the creditors, but also the debtor. Also, the rights of the debtor are protected
with this measure as he is able to have a significantly good level of living. Last but not least, the
provision that states that when there is a sale of the estate as a whole there is a stay of
enforcement only when it applies to assets that are connected to the debtors business means that
the secured creditors can benefit from the other assets of the estate which also is protective of the
secured creditors rights.

3. Bibliography
The Challenges of Insolvency Law Perform in the 21st Century, Henry Peter, Jeandin Jason,
Kilbor
Greek Insolvency Code
UNCITRAL Legislative Guide on Secured Transactions
UNCITRAL Legislative Guide on Insolvency
Enforcing Security Rights, Clayton UTZ
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