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18/01/2016

Insolvency Framework

The voting of the Insolvency Framework by the Parliament of the Republic of Cyprus was an essential prerequisite for the smooth continuation of the implementation of the Cyprus economic adjustment program which was agreed by the government of the Republic of Cyprus in 2013 with the Troika and the participation of the Republic of Cyprus in the financial restructuring program.

The aim of the Insolvency Framework is to equip the credit institutions with the legal tools for the purposes of dealing with a mounting non performing loans and to offer creditors, (whether legal or natural persons) the means of restructuring loans.

The Insolvency Framework consists of the following laws:

  1. Personal Insolvency Law
  2. The act introduces two new mechanisms for the restructuring and or partial relief of personal debts subject to meeting the criteria stipulated by the Personal Insolvency Law.
    2.   Personal Bankruptcy Law, which introduces the legal framework within which physical persons being unable to restructure their debts may be declared bankrupt.

3. Amendment of the Companies Law, Cap 113 which introduces amendments to the framework by limited liability companies going into liquidation.

4. Amendments of the Companies Law, Cap 113, regarding debt restructuring which establishes a framework for the restructuring of company debts and rescue plans in order to assist companies with the continuation of business provided that such a rescue plan is viable.

5. The Insolvency practitioners' Law which establishes the framework  for the regulation of the practice of insolvency practitioners.