While the filing itself was not unexpected, the choice of venue was a surprise. As an ancient civilization headquartered in Europe, many analysts doubt whether the US Bankruptcy courts have jurisdiction over Greece. However, attorneys for the Mediterranean republic note that Greece is a member of the United Nations, and claim that the UN's physical presence in Manhattan gives the District Court for southern New York proper jurisdiction over the bankruptcy.
Assuming the jurisdictional questions can be resolved, many analysts hail the filing as a brilliant tactical maneuver. Gerhard Brandt, an analyst with Deutsche Bank, notes that were Greece to find itself in bankruptcy court in Europe, it likely would be liquidated in short order--but US bankruptcy courts have a reputation for being much friendlier to debtors. "If they want, the Greeks can drag this on for years." Brandt speculated that some creditors might be willing to settle for a fraction of what they are owed, to keep the bankruptcy estate from being consumed by legal fees.
Creditors, however, were outraged, and planned to ask for the dismissal of the case at the earliest opportunity. "This is [expletive]", said one creditor who spoke on condition of anonymity. "They run up debts, they party like mad, toga, toga, toga, and then they run to the Americans when it is time to face the music". A spokesman for another creditor doubted that the Greeks' maneuver would work. "Just because the UN is in New York--so what?"
A checkered past
Greece, by far the oldest continuous civilization in Europe, and one of the oldest in the world, has had a checkered past. Founded nearly three thousand years ago, ancient Greece is considered the birthplace of many modern innovations, including democracy, mathematics, and philosopy. However, much corporate infighting over the centuries, including a devastating battle between the company's headquarters in Athens and its Trojan operations--reportedly over a woman--robbed ancient Greece of much of its strength and vitality. And after a hostile takeover by bitter rival Rome, Greece ceased to be an independent concern for over two thousand years. After Rome's liquidation, the assets of Greece were owned by numerous other concerns, including the Byzantine and Ottoman Empires. Modern Greece did not arise until an IPO in 1830.
Many analysts believed that Greece, which had suffered from fierce competition throughout much of the twentieth century, had been starting to come around. The International Olympic Committee (UN:IOC)--a successful spinoff of Greece--has become an economic and cultural powerhouse; though Greece nowadays holds little equity in the concern. Greece's hosting of the 2004 Summer Games was widely hailed as a success--however it is now widely believed that the infrastructure buildout needed to successfully bid for the Games contributed to yesterday's bankruptcy filing. Noted one observer, "putting on the Olympics is expensive. While it can be profitable, it's a highly risky proposition for anyone without a healthy balance sheet".
An aggressive strategy?
In the bankruptcy filing, lawyers for Greece listed numerous assets which might offset the country's crushing debt. Some of the assets were expected, including kilometres of sunny Mediterranean beaches, numerous historical relics, hectares of olive groves, and the right to march first at the Olympic opening ceremonies. But others--such as intellectual property claims concerning things such as the Greek alphabet, democracy, and trademark rights around Greek place names--surprised analysts, who note that these things had long been considered to be in the public domain. "Claims to own mathematics are outrageous" said one IP lawyer consulted for this report. However, another attorney noted that the prospect of collecting royalties from anyone who uses phrases such as "alpha male" or "Trojan horse", was too lucrative to pass up. "They're in bankruptcy. What else are they going to do?" The attorney noted that many potential defendants might be willing to enter into licensing agreements simply to avoid the risk and expense of being sued.
In-house counsel for Church and Dwight Corporation (NYSE:CHD), the makers of Trojan-branded condoms, seemed unconcerned with the filing. "We have been using the mark for decades", he said. "As far as we are concerned, any rights the Greeks might have had to the name 'Trojan' were abandoned years ago". He promised that Church and Dwight would "vigorously" defend itself in court if necessary.
The bankruptcy filing might bring to a close one other longstanding dispute. Greece, which claims the rights to the name "Macedonia", has had an ongoing trademark battle with the Republic of Macedonia (UN:MKD) over the right to use the name. Should Greece not survive the bankruptcy proceeding, many experts believe that the Republic, a former subsidiary of the now-defunct Federal Republic of Yugoslavia, would become the sole user of the mark. When asked about the prospect of bidding on the name should it be auctioned off by the Court, Macedonian chairman Nikola Gruevski angrily stated that "we will not pay one single Euro for what is rightfully ours".
When asked for opinions as to whether or not Greece would survive the bankruptcy, analysts were mixed. HSBC's Lloyd Johnston was bearish on Greece's future, expecting the country to be liquidated, and its assets to be purchased by rivals such as Italy and Turkey. Frank Simpson, with Bank of America, stated that "they've had their run. No pun intended, but they're a grease spot". However, other experts were cautiously upbeat. Jean-Paul Duquette, with the Bank of Montreal, praised the Greeks for their legendary resiliency. "You don't survive for three thousand years if you are not resourceful", he said. "Great powers and great civilizations may come and go. But if you were to ask me if Greece were still around in another three thousand years, I would have to say yes".