The advertising agency Leo Burnett-Athens, which is owned by Publicis Groupe, was included in Article 99 of the Code of bankruptcy of enterprises, which enables companies to freeze their payments to external and domestic creditors. The agency owes around € 20 million and has filed a claim to the court for inclusion in Article 99 in the summer, informing its creditors several days earlier that it was going to declare bankruptcy. As a result, many TV stations that have agreed the sale of advertising time are left high and dry and in times of crisis, they will have to write off significant income from their balance sheets for 2011 and 2012. Other debtors to the company have already renegotiated and the advertising agency will not be paid for services rendered.
The first consideration of the claim was scheduled for November 25 this year, but the representatives of Leo Burnett did not appear and the court scheduled a new date for Tuesday this week. The decision for including the agency in the bankruptcy code provides legal protection against legal actions by creditors and allows renegotiating of the debt. In other words, the Greek branch of Leo Burnett may enter into a process of "haircutting" of some of its debts just like Greece itself in the process of reducing the face value of its government bonds. The court decision prohibits creditors to resort to individual or mass confiscations of property. A responsible mediator appointed by the court will contact the creditors - in this case big TV stations, to settle the debts of the advertising agency. Sources from advertising circles say that the financial problem of Leo Burnett came from the bankruptcy of the private Greek TV station, Alter, which owes external creditors more than half a billion euros, and its Executive Director Costas Yanikos was arrested last month for unpaid VAT amounting to € 1.2 million.
According to a study by Deloitte, over two thousand companies have come so far under the wing of Article 99 of the Code of bankruptcy in Greece and their numbers will continue to increase. Among the companies mired down are big names such as the construction company ΑΤΤΙΚΑΤ, the computer systems company Altec, the company marketing technology products Microland, Aldi supermarkets and many others. The recession and the long negative rate of the economy in general hamper entrepreneurship in the country, and when combined with large loans taken in different economic conditions, the result is inevitably Article 99.
Deloitte data show that in 2011 alone, GDP fell by 7.5% as a result not only of the contraction of entrepreneurship, but also due to the withdrawal of deposits. Withdrawn deposits for this year alone reached € 26 billion and for the last two years, their total value is around € 60 billion. Under these conditions, mainly companies with debts to banks, private lenders and suppliers remain in Greece while "fresh" money is looking for a secure home abroad and lately, outside the Eurozone.