Insolvency councillors key to passing foreclosures bill

By George Psyllides

ONE of the additional bills expected to be submitted by the government in an effort to achieve approval of the controversial foreclosures legislation is one that regulates the profession of insolvency councillors.

Opposition parties, including former coalition partner DIKO, said they would reject the bill in its current form but left a window open if the government ensured primary homes would receive as much protection as possible under the circumstances.

Apart from the insolvency councillors, the government was also preparing provisions to protect homes worth up to €350,000, pending the financial ombudsman’s mediation.

A bill regulating bank charges is also in the pipeline.

The insolvency councillor’s tasks concern debt restructuring of natural persons to ensure repayment of creditors and preserve, were possible, primary homes.

The scheme will also ensure creditors will not be worse off than in the event the borrower goes bust.

Their role would focus on preparing a debt restructuring scheme at the request of the borrower, who must act in good faith and disclose all their financial information.

Any repossession procedures will be briefly suspended giving the councillor time to present a restructuring plan, which could be binding if several criteria are met.

In the case of companies, they will be able to resort to a court to request appointment of a councillor.

The court will assess the company’s viability potential and if it judges that there is a chance of rescuing it, it will approve the appointment of a councillor and the company will enter the court’s protection for four months.

During this time, no lawsuit can be filed against the company and the councillor will review its financials and submit a restructuring plan to the court, which will be approved by the creditors beforehand.

Approval of the proposal by the court will make it legally binding for all sides.

The court will approve the proposal if it is judged “fair and proper” taking into account that the company will continue to operate, rescuing jobs, and that creditors would not be in a worse position than the one they would be in if the company was wound down.

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