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Cyprus

Insolvency framework left hanging till after Easter

DISY leader Averoff Neophytou

By George Psyllides
Lawmakers have failed to finish examining the five bills that make up the insolvency framework, the discussion of which and vote will probably now take place now after Easter on April 16.
The House had aimed to put the framework to the vote on Thursday, the last plenum before the Easter break.
April 2 is also the date the foreclosures law – which the opposition has repeatedly blocked – comes into force.
That law was suspended pending approval of the insolvency framework, which is seen as a safety net for crisis stricken vulnerable groups.
However, the House Finance and Interior Committees failed to finish their discussion on Tuesday. The delay would probably mean a fresh suspension of the foreclosures law.
The suspension prompted the island’s international lenders to withhold payment of around €85 million, the International Monetary Fund’s share of a €435 million tranche.
The new delay in the vote of the insolvency framework is due to disagreement over provisions that concern guarantors and a potential clash with the constitution of others.
MPs said they wanted to put an end to the saga before April 23, when the eurogroup is scheduled to meet.
Ruling DISY chief Averof Neophytou sought to justify the delays, saying the bills must be correct and must protect borrowers.
“We think that these matters are urgent and despite delaying, when we vote on them they must be legally correct and serve the aim of protecting borrowers,” he said.
However, he did agree with his DIKO counterpart, Nicholas Papadopoulos, that delays ultimately served the banks.
Papadopoulos said guarantors were not the only problem. There were other matters that needed to be ironed out in the complex bills, like the treatment of people who went bankrupt, those at risk of bankruptcy, lawsuits, or liquidation, and those who owe money but have no mortgages.
All these borrowers must be protected and there is no proposal from any party that covers them all apart from the insolvency framework, which we want to improve, he said.
Papadopoulos said banks should not be able to go after guarantors before exhausting all other avenues relating to the borrower. The bill has no such provision, he said.
EVROKO chairman Demetris Syllouris, whose vote could be decisive when the bill goes to plenum, said he submitted a proposal regarding guarantors and if it is accepted, he will vote in favour of all five bills. Otherwise, he warned, he will reject them.
Syllouris said his suggestion provides the debtor and guarantors would be relieved of further obligations if the property was sold under 80 per cent of its initial market value. If banks showed responsibility, he said, and sold the property at a price that exceeded 80 per cent of its initial value, then they can move onto the debtor and the guarantors for the balance of the loan.

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