Analysis of the corporate rescue procedures in the Insolvency Law of the UK and Cyprus : An empirical perspective

Ellina, Sofia and Akintola, Kayode and Milman, David (2020) Analysis of the corporate rescue procedures in the Insolvency Law of the UK and Cyprus : An empirical perspective. PhD thesis, Lancaster University.

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Abstract

Administration and company voluntary arrangements can be used by economically distressed companies in the United Kingdom (UK) as rescue tools within its insolvency regime. In Cyprus insolvent companies have three legal options that operate as alternatives to liquidation: receivership, schemes of arrangement, and examinership. Through comparing but also taking a separate contextual analysis of the rescue procedures of the UK and Cyprus, this thesis examines these corporate rescue regimes and makes recommendations for their improvement. The efficiency of corporate rescue tools is assessed through an empirical research that includes quantitative data collection of administration and conduct of interviews in both the UK and Cyprus. In May 2015, the Parliament of Cyprus made amendments to its insolvency law, which had the purpose of modernising the system and promoting a rescue culture. Companies Law (CAP. 113) was amended through the Insolvency Law 2015 N. 65(I)/2015, that included examinership. Receivership and schemes of arrangement pre-existed but examinership was implemented in the legislation after the amendment of CAP. 113 in 2015. Administration and examinership both have a primary common objective, which is to save the company, but their differences are significant as will be illustrated. A key aim of this project is to evaluate Cyprus’s current position and options in relation to corporate rescue with the influence of the efficacy of corporate rescue mechanisms in the UK and other jurisdictions. On the whole this thesis will identify several aspects that need to be reconsidered for the UK corporate rescue regime to become more effective such as promoting a better treatment for creditors but at the same time enhancing rescue and an infrastructure to attract rescue finance as well as to minimise the disadvantages that arise from the contemporary practices. The lessons learnt from the UK will be used as an advantage to the Cypriot legislator. The Cypriot corporate rescue regime could become more appealing and ease access into the world of restructuring competitiveness, but certain caveats that will be highlighted could possibly obstruct this.