On Saturday, 18 April 2015, the Parliament voted in favour of the five bills that constitute the Insolvency framework. The Insolvency framework is an essential prerequisite for the smooth continuation of the implementation of the Cyprus economic adjustment programme which was agreed in 2013 with Troika and the participation of Cyprus in the ongoing quantitative easing programme that the European Central Bank (ECB) has been following since March.

The Insolvency framework will equip the credit institutions on the island with all the tools needed for handling the € 28 billion of Non – Performing Exposures.

The five bills are:

1. Personal Insolvency Law

The Act introduces two new mechanisms on the debts of natural persons:

Personal payment plans through which individuals’ debts are restructured, under certain conditions.

A debt discharge mechanism through which, debtors who do not have disposable income or substantial assets that could be used to pay off their debts, will be exempt from debts of up to € 25.000.

2. Personal Bankruptcy Law

The Law streamlines the bankruptcy procedure for individuals.

3. Companies Law amending regarding company liquidation

Amendments in the legislation aim to modernise the compulsory clearing process. One of the main changes introduced by the amending law concern the appointment of a liquidator, who may now be appointed not only by the court but also by creditors and contributors.

4. Company Law amended regarding company debt restructuring

This law establishes a mechanism for restructuring the debts of companies, and rescue and rehabilitation of the business of companies, in order to ensure company survival and viability of businesses.

5. Insolvency Practitioners Law

The new legislation establishes and regulates the profession of insolvency and, in particular, provides the procedure and conditions for recognition of professional bodies for licensing purposes insolvency consultants and supervision, and the procedure and conditions for authorisation.

Find out details about Cyprus Tax by downloading our annual publication Tax Facts 2015.

Important note: This article has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice from a qualified accountant.

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