Despite financial support from the government, hundreds of companies in Cyprus have collapsed due to the coronavirus pandemic.
According to the Insolvency Service, 2,687 businesses were closed in the country between March 2020 and May 2021, that's the highest number since 2010. The previous "record" was in 2017, when 2,497 companies ceased operations in Cyprus due to the consequences of the 2013 economic crisis.
At the same time, the largest number of business liquidations fell on December 2020 - 336 companies were closed.
This became the second largest number in the past 11 years. The previous one was registered in December 2016, when 426 companies were liquidated in Cyprus.
2,235 voluntary liquidations took place in the country in 2020, and 887 from January to May 2021. By month, the indicators were distributed as follows: 168 companies closed in January, 207 in February, 180 in March, 193 in April, and 139 in May. According to the same statistics, 48 companies were declared bankrupt from March 2020 to May 2021. There are nine bankruptcies in 2021. By the way, these indicators show that the number of liquidated companies in Cyprus will only grow.
As you may know, a company is declared bankrupt if it has a debt of more than 15 thousand euros.
It is worth noting that over the past 15 months, 175 applications for a personal debt repayment plan have been submitted to the Insolvency Service. In fact, the data of the Insolvency Service show that there was a tendency to an increase in the number of applications from March to May 2021, as it reached 63. Finally, as regding the issuing a decree on the cancellation of debts of citizens of up to €25 thousand, their number reached 55.
Cyprus is expected to introduce a new bankruptcy law in the summer of 2022, which will help prevent the liquidation of many companies.
In particular, Cyprus intends to introduce into national legislation Directive 2019/1023 of the European Parliament on timely preventive restructuring and debt repayment. The aim of the European directive, which will be harmonized with national law, is to ensure that a viable business can get rid of its debts completely after a reasonable period of time.
The Directive should help to create a restructuring framework that can effectively prevent the liquidation of companies even before they become insolvent. At the same time, among other things, procedures are established to protect transactions related to restructuring, a regulatory framework is determined to facilitate the exit from debts of a bona fide category of debtors, and the consolidation of corporate and private loans is provided.