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Parliament accepts Anastasiades’s referral of insolvency law

By Stelios Orphanides

Parliament on Friday accepted President Nicos Anastasiades’s referral of the law on the treatment of bankrupt persons passed by the House on June 28, the Cyprus News Agency (CNA) reported.

Anastasiades referred the law back to parliament on the grounds that it conflicted with the constitution by affecting enshrined creditor rights, and was legally problematic as it had a retroactive effect.

In his decision to refer the law, the president cited its unimplementability with respect to persons for whom a receivership order was issued and unnecessary for rightfully-reinstatedpersons.

The law was proposed by Costis Efstathiou of the socialist Edek party, Michalis Giorgallas of Solidarity and independent MP Anna Theologou.

In his letter to parliament, Anastasiades said the law would have granted to persons against whom receivership orders were issued, similar rights to those of bankrupt people who were subsequently rightfully reinstated or had the receivership order cancelled based on the provisions of the law’s article 31A which was meanwhile abolished.

Anastasiades said that the referred law could not be implemented because with the cancellation of the receivership order, a reinstatement would be impossible as the affected person would cease to be bankrupt.

In addition, a person who had a receivership order cancelled was responsible to manage his or her assets and repay debts and therefore has no movable or immovable PROPERTY in receivership or verifiable debts that could be forgiven.

The referred law also negatively affects creditors rights, by relieving a debtor years after the issue of an order cancelling the latter’s bankruptcy, Anastasiades argued. A creditor who applied for the cancellation of a receivership order before 2015 did so having in mind that the debtor would continue to owe to creditors, he added.

As the law had a retroactive effect, the president continued, this affected rights that pre-existed, including the creditor’s property rights. Furthermore, the liability of a debtor is the product of a contract which is a right enshrined in article 26 of the Constitution, with article 23 protecting all property rights, including real and financial assets, Anastasiades said.

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