Although it is a relatively unknown procedure, examinership may hold the key to the survival of businesses dealing with the financial consequences of the COVID-19 pandemic.

What is examinership?

The COVID-19 pandemic created an unprecedented situation for the lives and livelihoods of people from every socioeconomic background. In response to the pandemic, Cyprus introduced a series of humanitarian and financial measures, with the latter covering insolvency and restructuring matters.

Chapter 113(III) of the Companies Law is the main legal framework which regulates the voluntary liquidation procedure in Cyprus. There are two ways in which voluntary liquidation can be triggered: by members or creditors.

Introduction

Cyprus offers an attractive alternative to court-sanctioned debt restructurings through the reduction of the statutory majority necessary for approving a scheme of arrangement.

Recent statutory amendments in this regard have:

Examinership was introduced to the Companies Law (Cap 113) in 2015 as a restructuring procedure for companies in financial distress with reasonable prospects of continuing as a going concern.

As a result of the numerous cross-border structures involving Cyprus, the need to recognise foreign insolvency proceedings in Cyprus is becoming more common.

Insolvency proceedings initiated in the European Union can be recognised in Cyprus through the EU Recast Insolvency Regulation (2015/848).

In the absence of legislative framework providing for the recognition of foreign insolvency proceedings in Cyprus, such recognition may be achieved under the principles of common law.