1 / 23

Presentation by Andrie Kypridemou Officer Insolvency Service

INSOLVENCY and EFFECTIVE DEBT RESTRUCTURING. Presentation by Andrie Kypridemou Officer Insolvency Service Bankruptcies and Liquidations Section DEPARTMENT OF REGISTRAR OF COMPANIES AND OFFICIAL RECEIVER. INSOLVENCY and EFFECTIVE DEBT RESTRUCTURING.

awindom
Download Presentation

Presentation by Andrie Kypridemou Officer Insolvency Service

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. INSOLVENCY and EFFECTIVE DEBT RESTRUCTURING Presentation by Andrie Kypridemou Officer Insolvency Service Bankruptcies and Liquidations Section DEPARTMENT OF REGISTRAR OF COMPANIES AND OFFICIAL RECEIVER

  2. INSOLVENCY and EFFECTIVE DEBT RESTRUCTURING • Law on the Insolvency of Natural Persons (Personal Repayment Plans and the Debt Relief Order) N.65(I)/2015, as amended by N.85(I)/2018. • Procedural Rules on the Insolvency of Natural Persons (Personal Repayment Plans and the Debt Relief Order) of 2016 What are the DRO and PRP: - preventive restructuring schemes - used to avert the insolvency of natural persons - collective debt reorganisation - resolution of NPLs - schemes regulated by the Insolvency Service of Cyprus(ISC)

  3. DEBT RELIEF ORDER Scheme for the discharge of unsecured debts up to the amount of €25.000 «secured debt» means debt the repayment of which is secured by a security over any asset or property of any nature, up to the value of the secured property, as this is evaluated per article 44 (market value). ELIGIBILITY CRITERIA • Net disposable income up to €200 (Household income less Reasonable Living Expenses, income tax, contributions to social securitiesfund and excluded debts) • Assets: - 1 vehicle of value up to €4.000 - Books, tools and other equipment that are reasonable necessary for the debtor’s employment or business of total value up to €6.000 - Other assets of total value up to €1.000 (deposits, shares,jewellery) - household appliances necessary to maintain a reasonable standard of living

  4. DEBT RELIEF ORDER CALCULATION OF Reasonable Living Expenses * If there are more persons with disposable income in the household, then the ISC takes into consideration their disposable income too and then deducts the RLE of all the household to calculate the debtor’s RLE.

  5. DEBT RELIEF ORDER PROCEDURE

  6. DEBT RELIEF ORDER EFFECT OF THE DRO The debtor and any guarantors are discharged from the specified qualifying debt (amount up to €25.000) and from allaccumulated obligations, charges and interest in relation to it, that were created from the date of the application of the debtor to the ISC to the issuance of the DRO from the Court. • Write off of the specified qualifying debt from creditors • Aversion of bankruptcy of the debtor who is given the chance to continue being financially active • The guarantors are also discharged from the obligation to repay the specified qualifying debt • No discharge of any secured debts of the debtor • No discharge of any co-debtors

  7. DEBT RELIEF ORDER

  8. PERSONAL REPAYMENT PLAN Scheme for the consensual settlement of debt between the debtor and his/her creditors. For natural persons only, but may include in the scheme both personal and professional/ business obligations of the debtor owed by himself personally. The PRP is developed by an accredited Insolvency Practitioner (IP), following assignment by the debtor.

  9. PERSONAL REPAYMENT PLAN PRP ELIGIBILITY CRITERIA • The debtor is insolvent and by participating in a PRP for 5 years he/she may become solvent again • The debtor submits detailed Specified Financial Statement • The debtor consents to a search on his financial affairs, assets, liabilities. • The debtor is not bankrupt or has not been reinstated from bankruptcy in the past 5 years • The debtor did not benefit from a DRO in the past 3 years • The debtor did not commit preferential treatment towards any creditor or guarantor • The debtor did not commit any transaction at an undervalue

  10. PERSONAL REPAYMENT PLAN • PRP may include: • Any amount of debt • Secured and unsecured debts - account stated or terminated or not so • Debts owed to governmental or local authorities • Obligations towards any creditor – financial institutions, utilities, tuition fees • The IP fee • Excluded debts: • Debts in satisfaction of a child maintenance order • Debts deriving from Order for damages for causing death or injury • Fines for any criminal offence or offence related to money laundering • Debts for money acquired by fraud, embezzlement, undue influence

  11. PERSONAL REPAYMENT PLAN PROCEDURE

  12. PERSONAL REPAYMENT PLAN …

  13. PERSONAL REPAYMENT PLAN Other interim applications to Court

  14. PERSONAL REPAYMENT PLAN The duration of a PRP shall not exceed 60 months and any extension of this period shall not exceed 12 months. The IP monitors the implementation of the plan andhas an obligation to review it annually and keep account records.

  15. PERSONAL REPAYMENT PLAN PRP amendment - By request of the debtor or any specified creditor to the IP - When, during the implementation of the plan, the personal circumstances of the debtor change to such an extent that it is necessary to modify it. Procedure by the IP: • Requests form the debtor to submit new SFS • Develops proposals for the amendment of the PRP • Asks the debtor to approve the proposed amended PRP(the debtor may decline it only under specified circumstances) • Calls meeting of creditors to approve the amended PRP • Notice to the Insolvency Service • Application to Court for confirmation of amended PRP

  16. PERSONAL REPAYMENT PLAN TERMINATION of the PRP (a) By application of the IP or a specified creditor to the Court on grounds that the debtor: • Did not comply with the obligation for payment of any instalment under the PRP for a period of more than 3 months • Did not comply with any other obligation deriving from the PRP • Has breached a term of the PRP • Has unreasonably declined a proposed amendment of the PRP • Was convicted for any offence under theLaw (Ν.65(Ι)/2015) (b) Immediate termination when the debtor did not comply with the obligation for payment of any instalment under the PRP for a period of more than 6 months

  17. PERSONAL REPAYMENT PLAN EFFECT during the PRP implementation • Protection of the primary residence of the debtor • Keeping the RLE of the debtor and his family • Protection of the debtor and any co-debtors from creditorsclaims • Protection of guarantors (their main residence, RLE, from any creditors claims after the first 2 years of the PRP etc) EFFECT by the end of the PRP implementation: • Discharge of the debtor from any outstanding amount of unsecured specified debts • Obligation of the debtor to repay any outstanding amount of specified secured debts as per the initial loan contract or as per the terms of the PRP, if so specified in it • The entry in the PRP Registry kept by the ISC is deleted within the next 3 months

  18. NON CONSENSUAL PRP When the PRP is rejected by the creditors and the debtor fulfils the following eligibility criteria: • There is a mortgage or other security over the debtor’s primary residence • The market value of the debtor’s primary residence is up to the amount of €350.000 • The total value of the rest of the property of the debtor is up to the amount of €500.000 • The debtor suffered reduction of his salary of at least 25% • The debtor meets the eligibility criteria for consensual PRP • There is a Protective Order still in force

  19. NON CONSENSUAL PRP EFFECT of the Non Consensual PRP + may be forced on creditors that have unreasonably declined the proposed PRP earlier + it’s the last resort for a viable, honest debtor to avoid bankruptcy + protection of RLE of the debtor and his family + protection of movable assets of the debtor of total value up to €50.000 (necessities, home furniture & appliances) + protection of immovable property, that does not constitute security for debt, of total value up to €75.000

  20. COORDINATED SCHEME This plan may be utilized by debtors that meet the eligibility criteria of a consensual PRP and also exercises decisive influence on a micro enterprise. «micro enterprise»= a company which employs less than 10 persons «exercises decisive influence»when: • Owns most of the issued share capital of the company or • Holds the majority of the votes that correspond to the securities issued by the company or • Can appoint more than half of the members of the administrative, managing or supervisory body of the company

  21. COORDINATED SCHEME PROCEDURE

  22. COURTS’ PROCEDURAL RULES ON DRO AND PRP OF 2016 On the bright sight… • Strict deadlines on the timing of all applications to Court • Strict deadlineson the timing of the Court’s decision - judges • Guidance on the type, form and examination of applications • Include, for the first time ever, provisions for the electronic filing, servicing and submitting of documents in Court procedures However…. • Does not include many deadlines for the expedited administration of cases by the Court Registrar • Implementation of the provisions on electronic services is suspended indefinitely

More Related