Compulsory winding-up by Court order

General

Compulsory winding-up by Court order is the procedure where a company is wound-up following a Court order in order to liquidate its assets and pay off all or part of its debts. Winding up includes the entire movable and immovable property of the company.

A winding-up order is issued upon relevant request which may be submitted by the company, by a creditor or contributor of the company, by an administrator of another Member State, by an official receiver or by the examiner.

The official receiver is appointed as liquidator because of their capacity. At a later stage, a licensed insolvency practitioner may be designated, either appointed by Court upon request of the official receiver or selected at the first meeting of creditors and contributors.

The official receiver or liquidator handles and executes all the actions required for the settlement of the affairs and the distribution of the company’s property to its creditors.

Compulsory winding-up should be completed within 18 months. The time of filing of the winding-up petition is considered as the beginning of the company’s winding-up by Court order. Upon request of the official receiver or liquidator, the Court may issue an order for the extension of the term of the winding-up.

Requirements

Winding-up order issue:

The main cases where the company may be wound up by Court order is when it is unable to pay off its debts or when it has decided by virtue of a special resolution that it should be wound up by Court. In case of failure to pay off its debts, the amount of debt to a creditor must exceed EUR 5 000.

Issue of a winding-up order annulment:

A winding-up order may be revoked or ceased upon request of the liquidator or the official receiver or the creditor or contributor to the Court, provided that there are consents or redemptions from all the creditors of the company or because the winding-up order should not have been issued.

Applications and Forms

Application/Form	Category	Price	Electronic Submission
General Proxy Form 14	Applications and forms for companies under liquidation	€0,00	-	More
Proof of debt form for liquidations	Applications and forms for companies under liquidation	€0,00	-	More
Special Proxy Form 15	Applications and forms for companies under liquidation	€0,00	-	More
Statement of affairs for companies	Applications and forms for companies under liquidation	€0,00	-	More

Legislation

General obligations:

When the winding-up order is issued, the company or the creditor immediately notifies the official recipient by submitting a copy thereof. The same also applies in case of annulment of the winding-up order.
The company submits a statement of its affairs to the official recipient within 30 days from the issue of the winding-up order. This statement includes information related to the company’s assets, its creditors, as well as the collateral held by them. The statement is submitted and verified by the officers of the company.

Appointment of a liquidator:

The winding-up order, the official receiver decides whether to convene a meeting for the appointment of a private liquidator, which should be held within 60 days following the service of the order.
Regardless of the decision of the official receiver, they should convene a creditors’ meeting if requested by creditors of the company representing one tenth of its value.
The appointment of the liquidator is published at the website of the official receiver and at the Official Gazette of the Republic of Cyprus.
The liquidator of a wound up company delivers to the official receiver a receipt and payment account for audit in their capacity as a liquidator at least twice a year.

Verifications of creditors’ debt:

The creditors of the company should verify their debt or claims, by submitting a written verification of their debt to the official receiver or liquidator within 35 days from the date that the liquidation order is published in the Official Gazette of the Republic of Cyprus. The time limit may be extended upon justified request of the creditor. The verification is submitted together with all the evidence.
Secured creditors who have made their collateral available may verify the remaining debt amount, after deducting the collateral amount.
In case that the verifiable debt is in a currency other than euros, the debt amount will be converted to euros, in accordance with the official currency index at the time that the company was wound up
If the verifiable debt includes interest rate over the debt in relation to the period before the winding-up date, the interest rate may only be claimed for the period starting from the claim date until the date of issue of the winding-up order.
If the verifiable debt arises from a guarantee contract, a Court order should be issued against the guarantor or the account related to the guarantee should have been terminated, until the date of issue of the winding-up order.
The official receiver or liquidator accepts or rejects in writing the verification of the creditors’ debt for dividend reasons.
If not satisfied by the decision of the official receiver or liquidator, the creditor may bring an action before the Court within 21 days from the day that they were notified about the decision of the official receiver or liquidator.

Assessment of secured property:

Secured creditors should submit a preliminary assessment of the value of their secured property to the official receiver or liquidator within 10 days from the publication of the winding-up order in the Official Gazette of the Republic of Cyprus.
Within 10 days from the submission of such preliminary assessment, the official receiver or liquidator must notify the creditor whether the assessment is accepted. In this case, this assessment is binding for everyone.
If the assessment is not accepted, an independent evaluator should be appointed who, within 10 days from appointment, should determine the value of the secured property. The assessment is binding for everyone.

Dividend distribution:

Dividends are distributed between creditors who have verified their debts as soon as possible. The distribution of the first dividend, if any, must be announced and completed within 4 months from the first meeting of creditors. Any subsequent dividends should be announced and distributed within periods that do not exceed 6 months.
The preliminary winding-up expenses are deducted from the distribution amount and the amounts which may be necessary for carrying out the winding-up proceedings are retained.
Subsequently, the debts paid before all other debts, such as local and governmental taxes, as well as any fees and reimbursements for the employers of the company are deducted.
Previous debts are equally classified between them and are paid in full or in equal parts, when the amount to be distributed is not sufficient.
Prior to the announcement of dividend distribution, the notification of the intended dividend payment is published in the website of the official receiver or liquidator. A notification is also addressed to the company’s creditors who have to verify and confirm their debts.
During the announcement of dividend distribution, the notification of dividend payment is published in the website of the official receiver or liquidator. Creditors who have verified their debts are also informed on the amount of dividend they will receive, as well as on the time and method of the payment.

Early dissolution of the company:

The official receiver may resort to Court for the early dissolution of the wound up company, if they consider that the liquid assets of the company are not sufficient to cover the winding-up expenses. After the issue of the winding-up order by the Court, the official receiver registers such order and the company is dissolved within 3 months from the date of order registration.

Company dissolution:

When the affairs of the company have been fully settled, the official receiver or liquidator files a petition to Court for the dissolution of the company.
The Court issues an order for the dissolution of the company and, then, the company is dissolved. The official receiver or liquidator submits a copy of the dissolution order to the Registrar of Companies for registration purposes, within 14 days from the issue of the order.

Winding up register:

The official receiver keeps an electronic winding-up register which they publish on their website.

Contact Persons

Marios Chrysanthou

Phone: 22466585

Email: [email protected]

Maria Psara

Phone: 22458614