2nd Sep 2015
The recent amendments to the Cyprus Companies Law Ch.113 (hereinafter “the Law”) have introduced the process of Examinership in Cyprus. The legislation is heavily based on the respective provisions of the Irish Companies Act, therefore beside the provisions of the Cypriot Law, the relevant Irish case-law and authorities will be examined for the purposes of this memo.
Examinership is a debt restructuring and corporate rescue procedure for insolvent companies or companies that are likely to be insolvent, that was introduced in Cyprus with the Companies Law (Amending) (No.2) Law of 2015- Examinership N62 (I)/ 2015. The purpose of examinership is to give a company facing insolvency a period of protection from its creditors, in order to facilitate its survival as a going concern and to save viable businesses and jobs. It must be noted that examinership ‘is not designed to help shareholders whose investment has proved to be unsuccessful’. The protection period has been described as a ‘temporary breathing space’.
For an Examinership Order to be granted, the Court must be convinced that the company has a ‘reasonable prospect of survival’. Whether such a prospect exists, it is determined by the Court on the basis of a petition that is filed before it; this petition is accompanied by an independent report. Should an Examinership Order be granted, the company remains under the protection of the court for a time period of 4 months, starting from the day that the application for the appointment of an examiner was filed. This period may be extended for an additional 60 days, if the court is satisfied that such an extension is necessary for the filing of the Examiner’s report.