By Alexandra KASTRINOU
Nottingham Law School,
Nottingham Trent University, England

Proceedings Elements of the Directive already included into the national legislation
Section 198 of the Companies Law enables the debtor to take action at an early stage, i.e. when it is foreseeable that the company might be unable to pay its debts in the near future, and to reach a compromise with its creditors or its members, or a particular class of them. Restructuring under section 198 is fast and flexibly.
In addition, section 201 of the Companies Law makes provision for facilitating the reconstruction and amalgamation of companies. In particular section 201 states that where an application is made to the court under section 198 for the sanctioning of a compromise or arrangement proposed and it satisfied that the compromise or arrangement has been proposed for the purposes of or in connection with a scheme for the reconstruction of any company or companies or the amalgamation of any two or more companies, and that under the scheme the whole or any part of the undertaking or the property of any company concerned in the scheme (“a transferor company”) is to be transferred to another company (“the transferee company”), the Court may, either by the order sanctioning the compromise or arrangement or by any subsequent order, make provision for matters such as: a)           the transfer to the transferee company of the whole or any part of the undertaking and of the property or liabilities of any transferor company; or b)         the allotting or appropriation by the transferee company of any shares, debentures, policies or other like interests in that company which under the compromise or arrangement are to be allotted or appropriated by that company to or for any person.
Finally, a debtor may opt to restructure its affairs by having resort to the examinership procedure. The court may grant an order to initiate the procedure, where it is satisfied that the company is likely to become insolvent and there is a reasonable prospect for the survival of the company.
Additional remarks
It should be noted that the insolvency framework of the Republic of Cyprus has recently been subject to radical reforms, which are aimed to promote and facilitate the rescue of financially distressed companied. In addition, with regard to liquidation, the new Companies Law makes provision for an expedited process aimed at avoiding delays and reducing costs. For instance it is possible for the liquidator (official receiver) to apply to the court for early dissolution of the company if he is satisfied that the assets of the company are insufficient to cover the costs of liquidation. In addition, under the new Companies Law, once the court made an order to initiate winding up proceedings, the official Receiver, becomes the liquidator and he shall no longer be regarded as a provisional liquidator. The aim of this chance is again to reduce the time and cost involved.
A criticism of the previous the previous regime was that secured creditors were not particularly supportive of rescue attempts; instead they were keen to enforce their security and initiate liquidation proceedings, leaving very little in the estate (at times nothing) for unsecured creditors. By increasing efficiency of the process the aim is to improve the position of unsecured creditors.
Please note that there are no any adaptations (either to existing procedures or by introducing new ones) that have been discussed/planned in order to meet the Draft Directive’s requirements.