The Cyprus parliament approved a new insolvency framework aimed at streamlining and modernising the existing system and promoting a rescue culture. The legislation includes the enactment of entirely new legislation and amendments to existing legislation and relates to the insolvency of both natural and legal persons.
The new Insolvency framework
The new insolvency framework comprises six legislative texts which entered into force on the 07/05/2015.
- Insolvency of Natural Persons (Personal Repayment Schemes and Debt Relief Order) Law of 2015
- Bankruptcy (Amending) Law of 2015
- Companies (Amending) Law (No.3) Law of 2015, regarding liquidation
- Companies (Amending) Law (No.2) Law of 2015, regarding a mechanism for restructuring corporate debt (Examinership)
- Insolvency Practitioners Law of 2015
- Insolvency Practitioners Regulations of 2015
Main aims of the new Insolvency framework
The main aims of the Insolvency Framework are:
- the creation of appropriate incentives for repayment of debt;
- the protection, where feasible, of the primary residence and under strict eligibility criteria;
- the provision of a second chance / fresh start of a bankrupt person so that he/she can be reintegrated in the economy and society;
- the introduction of a new mechanism offering full and speedy relief to those debtors with low unsecured debt, no assets, no income and who cannot file for bankruptcy according to the current laws (due to the low amount of their debt);
- the provision of incentives for the rescue and rehabilitation of companies to afford viable companies the opportunity to reduce indebtedness and preserve jobs, while maximizing the value as a going concern for the benefit of creditors, and
- the modernization of laws regarding the liquidation of companies and bankruptcy for natural persons, so that the liquidation procedure becomes speedier and more efficient.
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Theodorou Law is a Cyprus law firm with Cyprus lawyers and other legal experts on legal matters involving Cyprus law, EU law and international law. The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.
