Bankruptcy
General
Bankruptcy is the insolvency proceedings where the Court declares the debtor bankrupt, following the filing of a bankruptcy petition, either by a creditor or by the debtor. Once the Court issues the bankruptcy order, the property of the bankrupt is passed on to the trustee and is distributed between its creditors.
The Court may, after the filing of the bankruptcy petition and before the issue of the bankruptcy order, appoint an official receiver or a licensed insolvency practitioner as a temporary administrator of the debtor’s property. Once the bankruptcy order is issued, the official receiver is appointed as trustee of the bankrupt’s property. Creditors may appoint a licensed insolvency practitioner as a private administrator during a Creditors’ meeting convened by the official receiver following their own request.
3 years after the issue of the bankruptcy order, the bankrupt is automatically discharged from its verifiable debts with some exceptions according to article 27A of the Bankruptcy Law Ch. 5. If the bankrupt’s property has not been yet distributed, it shall remain at the hands of the trustee to the benefit of creditors. The bankrupt must, also after their discharge, cooperate with the trustee when needed.
Requirements
To submit a petition to the Court for a debtor’s bankruptcy, the following should apply:
- Its total (non-secured) debts shall exceed the amount of EUR 15 000.
- The petition should be accompanied by a certificate stating that there is no petition or personal repayment plan or protection order in force.
- The petition of the debtor should be accompanied by their sworn statement declaring that from the submission of the petition they have made every reasonable effort to compromise with their creditors with regard to their debts, by submitting a personal repayment plan, to the extent that the circumstances allowed them to do so.
- The debtor should reside in Cyprus or should have had their ordinary residence or place of residence or place of business in Cyprus or should have been operating in Cyprus for a period of one year prior to the submission of the petition.
For the issue of an annulment of the bankruptcy order:
The Court may, upon request of any interested party, annul the bankruptcy of the debtor, if it considers that the debtor should not have been declared bankrupt or if the debts of the bankrupt have been fully paid or have been settled, or if the creditors have consented to the annulment of the order.
For the automatic discharge of a bankrupt:
- The submission of the statement of the company’s property status and of the preliminary deposit by the bankrupt in the specified format to the official receiver or administrator at least one year before the automatic discharge is a necessary prerequisite.
- If the discharged individual is declared bankrupt again and then is automatically discharged again, they shall not be released from their verifiable debts, if not more than 6 years have passed since the last time that they were released.
