Cyprus Mail

OEV: suspend prosecutions against cash-strapped companies

By Stefanos Evripidou

THE EMPLOYERS and Industrialists’ Federation (OEV) yesterday called on the government to suspend all prosecutions of companies unable to meet their debts to the state, or else face multiple bankruptcies.

The federation said that due to the prolonged economic crisis and serious problems facing the banking system, a number of companies were in a position where they had depleted all their cash reserves and find themselves unable to fulfil their financial obligations even to the state.

This in turn has seen legal action launched by the state against those companies.

OEV highlighted that the government’s aim must be to preserve and revitalise business activity as a means to kick-starting the economy into action.

It has sent a letter to President Nicos Anastasiades seeking the immediate suspension until the end of 2014 of legal proceedings either in process or due to be launched against companies that are clearly unable to repay their debts to the state.

The federation has also requested the writing up of an agreement between government services and affected businesses regarding the manner and timing of debt repayment, with the focus on ensuring the survival of those businesses.

“If the above measures are not adopted, a large number of businesses will be at risk of bankruptcy very soon and not only will the state lose revenue, but it will also be burdened with additional costs (compensation due to redundancies, legal costs, liquidation costs etc),” said the statement.

OEV further noted that it was in consultation with a large auditing firm to investigate alternative legal practices implemented in other countries in the EU and US in similar cases, where companies under bankruptcy are put under protection from creditors until their reorganisation through debt restructuring. It gave as example, Chapter 11 of the Bankruptcy Code in the US.

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