European Restructuring Monitor (ERM)
Eurofound's ERM database on restructuring-related legal regulations provides information on regulations in the Member States of the European Union and Norway which are explicitly or implicitly linked to anticipating and managing change.
Companies Law (Chapter 113): Article 202A-202LH; Article 97, Articles 222-225 The Department of Insolvency and Related Matters Law of 2020 (68(I)/2020): Article 7 The Department of the Registrar of Companies and Intellectual Property Law of 2021 (133(I)/2021): Article 3
An examinership procedure was introduced in 2015 with an amendment to Cyprus' Companies Law (Chapter 113). The Law 62(I)/2015 amending the Companies Law is adding Part IVA 'Appointment of Examiner'.
The examinership procedure allows a company risking insolvency, or a creditor or a contingent or a prospective creditor (including an employee) of that company, to apply for examinership. The application must be accompanied by a rescue plan.
An examinership procedure envisages the appointment of an examiner (an expert in insolvency), under the court's supervision, who is in charge of evaluating the rescue plan. If the rescue plan is considered viable the court allows for the start of rescue operations. For the plan to take effect, the creditors' committee must agree with the plan, too.
During examinership, which can last up to six months (including extension), the assets of the company are protected from the enforcement of individual claims. The examinership ends by order of the court when insolvency problems are resolved or when no rescue operation is deemed possible by the examiner. In the latter case the court may order the company to be wound up.
Another rescue procedure is receivership (Companies Law, article 97 and 222-225), which allows for a creditor to claim their due but also allows for the continuation of the operations of the company. The court decides to appoint a receiver when it deems necessary to protect the creditor's claims. The receivership procedure puts the company's operation in the hands of the receiver who can decide how to recover the amount of the claim by selling, in whole or in part, the company's assets. The receivership procedure ends when the debtor's claim is satisfied. The receivership procedure should allow a company to return to its regular business operations once the debt is paid.
On the 1st of January 2020, the Department of Insolvency began its operation, based on the new relevant legislation. The management of the affairs of the Official Receiver and the Insolvency Service (as described in the aforementioned Companies Law) were transferred to the Department of Insolvency (as a result, in 2021 the Department of the Registrar of Companies and Official Receiver was renamed into the Department of the Registrar of Companies and Intellectual Property).
According to the Insolvency Legal and Regulatory Framework, among the main purposes of the Department and its procedures is to formulate and cultivate a culture of survival and second chances (as opposed to bankruptcy and liquidation), to aid with the rescue and restoration of business activity and the reconstruction and preservation of viable businesses through the establishment of a corporate debt restructuring mechanism, and to safeguard the viability of natural and legal persons, through the provision of appropriate tools and framework for restructuring their loans.
Examinership has many advantages to companies at risk of insolvency, as it provides them with some time in order to formulate a rescue plan.
Despite article 202IZ, which provided for the examiner to submit a notification on their appointment (formerly to the Department of the Registrar of Companies and Official Receiver, and presently to the Department of Insolvency) and the latter to publish such information on its websites, no such information was systematically administered and published from 2015 until now (2023), including statistics over outcomes of examinership procedures. Thorough inquiring and the interviewing of officers of the Department of Insolvency, revealed that the reason behind this is simply that there are actually zero cases of companies that proceeded with the rescue procedures. Throughout the years there was a number of companies that initiated communication with the Department of the Registrar (and later with the Department of Insolvency) regarding the rescue procedures, and even proceeded with submitting applications; however they did not follow through, withdrew their applications and opted with settling their debts extrajudicially.
Eurofound (2016), Cyprus: Rescue procedures in insolvency, Restructuring legislation database, Dublin, https://apps.eurofound.europa.eu/legislationdb/rescue-procedures-in-insolvency/cyprus
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