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.
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 2016 members of Parliament (MPs) proposed legal reforms with the aim of regulating the procedure for the appointment of receivers by debenture holders. Although debate on the issue stopped for a period, it recently re-emerged in vigorous form following the sale of hotel units by receivers who had been appointed by financial institutions pursuant to a floating charge.
Securitisation involves transactions that enable a lender or a creditor – typically a credit institution or a corporation – to refinance a set of loans, exposures or receivables, by transforming them into tradable securities accessible by investors.
The statutory framework regulating the purchase and sale of credit facilities in Cyprus was amended as part of an overhaul of the insolvency framework. The 2018 amendments sit alongside a new securitisation framework.
This note highlights the key aspects of the Purchase and Sale of Credit Facilities and Relevant Matters Law of 2015, as amended in 2018 (the “Law”).
What credit facilities are caught?
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)