Businesses in Cyprus are closing at a steady pace every month and compared to last year there is no upward trend. Despite the tools provided to entrepreneurs by the Insolvency Service, some seek to close the company despite finding ways to maintain it. More than 19 thousand are the voluntary liquidations that took place in Cyprus in the last decade, according to the data of the Insolvency Service, while the liquidation decrees of companies exceed 1300.
From analysis of the data of the Insolvency Service, the total voluntary liquidations in 2020 were 2.235 from 2.097 in 2019, 2.378 in 2018 and 2.497 in 2017. The voluntary liquidations in October 2021 were 148 and in September 164 while in August 108. According to the data in July it was 158 in June 204 and 139 in May. Voluntary liquidations were 193 in April, 180 in March, 207 in February and 168 in January. In the first ten months of the year, voluntary liquidations amounted to 1.669 compared to 1.679 last year and 1.650 in 2019.
As the data show, there is little interest in personal repayment plans. Applications reached 102 in 2020 from 63 in 2019, while the number has been stable for the last three years. For example in 2018 it was 65, in 2017 it was 60 and in 2016 only 35. In the ten months of 2021 it was 167, in 2020 it was 85 and in 2019 it was 51. Regarding the issuance of a debt write-off decree up to € 25 thousand, for citizens who meet in the criteria, their number reached 2021 in the decade of 42, 48 last year and in 2019 it was 95.
The issue of corporate bankruptcies is not something that concerns Cyprus but also the rest of Europe. ECB central banker Christine Lagarde has spoken out about the need for banks to turn off the funding tap to "zombie" businesses, ie non-viable businesses with loss-making uses and very high debt levels.
Businesses had noted they continue to survive thanks to low interest rates and refinancing by banks but also thanks to business support measures by governments during the pandemic. Christine Lagarde has repeatedly stressed that the target of liquidity injections was households and healthy businesses, but the banks used some of these injections to forcefully keep deeply troubled businesses alive so as not to write large losses, with negative impact on capital and their profitability. The European Central Bank considers that these loss-making companies are a brake on faster growth - the basic idea is that they lack funding from healthy businesses - and at the same time threaten the soundness of the banking system. The ECB is asking banks to bankrupt these companies. Otherwise, it will introduce special stress tests on European banks to expose "zombie" companies, in order to increase the required capital provisions and thus make their artificial survival unprofitable for the banking system.
philenews.com