Despite financial support from the government, due to response measures to COVID-19 and long quarantines, hundreds of companies have failed in Cyprus.
According to the Department of Insolvency, 2,235 enterprises closed in the country in 2021, which became one of the largest indicators since 2010.
The previous record was in 2017, when 2,497 companies ceased their activities in Cyprus due to the consequences of the 2013 economic crisis.
In 2021, 1,861 companies were liquidated voluntarily. By the way, a year earlier this indicator was 2235, in 2019 – 2097, in 2018 - 2378, in 2017 - 2497.
The largest number of voluntary liquidations in 2021 was recorded in these months:
- in November – 192 against 220 in 2020
- in October – 148 against 142 in 2020
- in September - 164 against 196 in 2020
- in August – 108 against 146 in 2020
- in July – 158 against 226 in 2020
- in June – 204 against 213 in 2020
- in May – 139 against 195 in 2020
- in April – 193 against 29 in 2020
- in March – 180 against 124 in 2020.
Over the past decade, about 20,000 voluntary liquidations have taken place in the country, while 1,300 companies have been forcibly closed.
It is worth noting that over the past year, 183 applications for a personal debt repayment plan were submitted to the Department of Insolvency, compared with 102 in 2020 and 63 in 2019. In fact, the data of the Department shows a tendency to increase the number of appeals. Finally, as for the issues of issuing a decree on writing off citizens' debts in the amount of up to 25 thousand euros, their number has reached 51.
Cyprus is among the countries that have allocated the most 'generous' government support to small and medium-sized businesses not in the form of a loan.
The total amount of one-time benefits paid is more than 400 million euros. Employees got about 700 million euros. This is the fourth biggest result in the EU.
In addition, from the summer of 2022, new bankruptcy legislation will come into force in Cyprus, which represents the norms adopted at the EU level. Thanks to it, effective companies will be able to get a second chance and completely get rid of debts, avoiding bankruptcy.
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 aligned with national legislation, is to ensure that a viable business can completely get rid of its debts after a reasonable period of time.
The essence of the Directive is to create a preventive restructuring framework that can effectively prevent the liquidation of companies even before they become insolvent. At the same time, among other things, procedures are being established to protect transactions related to restructuring, a regulatory framework has been defined to facilitate the exit from debts of a bona fide category of debtors, and consolidation of corporate and private loans is envisaged.
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