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.

The Cypriot corporate insolvency framework has undergone an overhaul over the past years.  The insolvency procedures summarised below are generally available to companies incorporated in Cyprus, except for certain regulated entities, such as credit institutions and insurance companies, to which specific insolvency frameworks apply.

Company arrangements and reconstructions

In a recent judgment, the Nicosia District Court decided that an affidavit was inadmissible due to the fact that the jurat was not in one of Cyprus's two official languages (ie, Greek or Turkish).(1)

Facts

Under the Civil Procedure Law,(1) a judgment creditor has the right to make any immovable property in which his or her judgment debtor is beneficially interested – and which is registered with the Department of Lands and Surveys in the debtor's name – security for payment of the judgment debt.

The rule in relation to money advanced by way of a loan, is that generally they become the property of the borrower, giving him the discretion to apply the money as he thinks fit, and leaving the lender vulnerable to the risk of the borrower’s insolvency.

In the context of streamlining procedures and avoiding lengthy processes, the Insolvency Service and the Bankruptcy and Liquidation Companies’ Division of the Registrar of Companies and Official Receiver of Cyprus announced that the procedure followed for granting authorization to open or maintain a debtor or bankrupt bank account has been abolished.