Personal Repayment Plans (PRP)

General

The procedure of personal repayment plans refers to insolvent debtors who, provided that they meet the eligibility criteria, may proceed to the restructuring of their debts by adopting a repayment plan to pay off creditors and to maintain their main residence.

The maximum term of the plan is up to 60 months with a right of extension up to 12 months unless stated otherwise on PRP terms and conditions.

The debtor submits all the items relating to their financial standing to a licensed insolvency practitioner. The insolvency practitioner informs the debtor on whether they meet the eligibility criteria for a personal repayment plan. The debtor confirms the appointment of an insolvency practitioner who will act on their behalf by signing a representation agreement.

The debtor fills in the statement of personal financial details in cooperation with the insolvency practitioner and authorises the practitioner to prepare and submit a repayment plan proposal. The practitioner confirms the eligibility criteria for the submission of the proposal by a written statement.

The insolvency practitioner files on behalf of the debtor an application for the issue of a protection certificate by the Insolvency Department. Following a successful audit, the Insolvency Department issues a protection certificate and submits a petition to the Court for the issue of a protection order. The term of the protection order is 95 days. The term may be extended up to two times for a period of up to 40 days each time. When expired it can be extended by Court for a period of time that the Court considers reasonable due to special circumstances.

During the protection order term:

The insolvency practitioner notifies the specific creditors on the protection order.
The specific creditors submit any preliminary assessment of the secured property and/or a verification of their debt. Creditors may also submit comments for the treatment of debts in the plan.
The insolvency practitioner prepares and submits the restructuring plan to the creditors for adoption, with the consent of the debtor.
If the creditors agree with a special majority, the restructuring plan is submitted to the Court for verification. Otherwise, the debtor, provided that they meet the criteria, may file a petition to the Court for the issue of an order, imposing the plan to all creditors.

Once the plan is verified or a Court order imposing the plan is issued, the plan enters into force and is rendered legally binding for the debtor and their creditors. If the debtor delays their payments for 6 months, the plan is considered as having failed and is terminated. In case that the debtor delay’s payment for more than 3 months the creditor has the right to file a court application to terminate the plan. If the debtor complies with their obligations, upon expiry of the plan, they are discharged from the unsecured debts of the plan, while they are discharged from secured debts only if provided by the plan and to the extent provided thereby.

Coordinated Repayment Plans:

If the main residence of the debtor serves as a collateral for the debt of a very small business, then the debtor may on the date that the protection order is issued submit an application for the appointment of an insolvency practitioner also as an examiner of such business, so that the coordinated repayment plan procedure may start. During the coordinated repayment plan procedure, both the personal restructuring plan and the settlement proposal for the company must be approved.

Requirements

In order for the debtor to be eligible to file a petition for a personal repayment plan, the following criteria shall apply:

The debtor should be insolvent, i.e. should be unable to pay off all of their debts, as they may arise.
The debtor should have their ordinary residence in the Republic of Cyprus at least 3 years prior to the date that current legislation was enforced.
The debtor should not be discharged of their debts, by virtue of a debt relief order, for the last 3 years.
The debtor should not be a bankrupt individual who has not recovered nor a recovered bankrupt individual for a period less than 5 years prior to the date of filing of the petition.
The debtor should not have participated in a personal repayment plan for the last 20 years.
The petition should be accompanied by a certified statement of the insolvency practitioner that:
- the statement of the personal financial data of the debtor has been duly completed;
- according to the details of this statement, the debtor will most probably continue to be insolvent for the following 5 years. However, if the plan is adopted, there is a reasonable prospect that the debtor becomes solvent within the next 5 years;
- the debtor meets the eligibility criteria.
In order for a debtor to be eligible to file a petition for a non-consensual personal payment plan to Court, provided that the proposal has been rejected by the Creditors’ meeting, the following criteria shall apply:
- The market value of the main residence is not higher than EUR 350 000.
- At least one of the creditors holds a collateral over the main residence of the debtor with a market value that does not exceed EUR 350 000.
- The total value of the property of the debtor, less the value of the main residence, does not exceed EUR 500 000.
- The debtor is not able to pay off their debts because their income was decreased at least 25% as a result of events beyond their control that have occurred from 2009 onwards.
The solemn declaration of the insolvency practitioner should also confirm that the debtor meets the eligibility criteria and that, if the plan is adopted, the creditors will be in a better position than in the case that the debtor goes bankrupt.

Applications and forms related to Examinership

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Legislation

Register

The Insolvency Department keeps an electronic register of protection orders and a register of personal repayment plans which are also published on its website. The details of a protection order are deleted from the register within 3 months from the date that it ceases to be valid. The details of a personal plan are also deleted from the register within 3 months following the successful completion or termination of the plan.