AFTER countless delays and weeks of heated debates a plenary session of parliament today finally passed the five bills comprising the insolvency framework.
Despite earlier predictions that the vote was too close to call, the 56 MPs voted 33 in favour and 23 against.
MPs also voted to extend the ban on repossessing homes whose purchasers have no Title Deeds until 10 June, provided they have paid at least 80 per cent of the sale price or have fully complied with their contractual obligations towards the seller. This will give the government sufficient time to fulfil its pledge to submit legislation to comprehensively regulate the matter of homes that have been paid for but whose purchasers are facing the prospect of repossession because of developer unpaid mortgages.
Although the passing of the insolvency framework clears the way for the troika to return to Cyprus and resume its review of island’s economic adjustment programme, the passing of the insolvency framework does not necessarily mean that the next tranche of the bailout loan will be forthcoming.
The troika will first have to assess the final text of the insolvency bills and will then prepare a report for the Eurogroup.
The delay in passing the insolvency bills resulted in the IMF withholding around €85 million of bailout monies and also disqualified Cyprus from participating in the ECB’s quantitative easing programme.
Last week the ECB warned the government that it would not accept Cypriot bonds as collateral for providing liquidity to the island’s domestic banks until the insolvency bills had been passed.
That is an easy one Whirlybird Rtd. Coordinated fraud between developers,bankers and lawyers with the help of successive Cyprus governments turning a blind eye.
Being a Cyprus cynic I am not convinced that the problem only affects those with memos but possibly all without deeds where their developers have retained the titles, are in debt and in trouble with the banks.
Whose “asset” is the property?
It was a pretty safe bet that once the restrictions on the transfer of money off the island were passed the insolvency bill would follow by then all the “strategic” debtors who had sold property and kept it and mortgaged and kept it, had moved their money out of reach. What annoys me is that they insult our intelligence by thinking that they are so clever and that we don’t realise what is going on
Up to now the system has protected them. Let us hope that the system is changing so that these crooks and con men who pose as respectable businessmen will get brought down and innocent people will get justice!
Hi Nigel,
What happaned with the protection of the primary homes of people with financial difficulties who cannot maintain payments? Is it voted that part?? Thanks….
@Kalin on 2015/04/19 at 6:36 pm – please refer to the article Home repossession ban extended.
I’m sorry I cannot seem to get my head around this one!
I paid my home in increments as it was being built, from what I can see through a Land Registry search the first mortgages that our developer took out on our estate was Two Months after our registration. There are three owners? including us (wife and I) who are in this situation, we have NO mortgage but the developer has a memo on the estate of €91,000. How can we and probably thousands more be classified as being in debt because a developer who is crooked and hiding his gains get away with it while the Government go through all the motions of forestalling possessions instead of going after the guilty and absolving the innocent parties involved.
@Nigel,
Do I understand it correct that those of us who have paid in full for their property but still have no title deeds are protected from repossession because of a developers debts ’til July this year? What happens after this date, or is that still in the hands of the corrupt and devious politicians, lawyers and developers?
@Pippa on 2015/04/19 at 12:16 pm – It certainly looks as if those who have paid for their homes will not have them repossessed if their developer fails to pay his debt to the bank.
As to what will happen after that, Interior Minister has instructed the House of Representatives to draft a bill to protect paid-up buyers from repossession. You can read more about that at Pledge to protect paid-up buyers. As we all know, Cyprus generally fails abysmally to meet agreed dates!
The real elephant in the room (gets around – does that elephant) will be the balance of focus between “strategic defaulters” – those folk who between them owe €2-2.5bn and those other folk earnestly trying to re-structure their loans to survive.
The Republic’s banks and Government have done a fantastic job of demonstrating their total commitment to protecting the former – whilst simultaneously attempt to comprehensively destroy the comparatively microscopic remaining asset base of the latter.
It will be a long time – a very long time – before the Republic loses the stigma of “island of shame”. For me though – I remain philosophical. Such corrupt practices where the poor prop up the wealthy are nothing new all over the ‘civilised’ western world. Just their governments have done a better spin job on the electorate.
What matters now (as it did 5 years ago) is that new thinking is forged. I could still be amazed. The Republic may just be the tiny corner of the world where it’s so bad – it might just end up good. It’s Sunday – let’s try and believe in human miracles…
Hm, would someone be so kind and explain me the insolvency framework please? Or direct me where I can find it explained in simplier way for dummies like me?! Thanks.. :-)
@Kalin on 2015/04/18 at 9:10 pm – Basically its a way of dealing with individuals and companies that can no longer meet their financial obligations to their lenders.
Under the old outdated laws, it could take up to ten years to repossess a property if a borrower failed to maintain their mortgage/home loan repayments and (I believe) it was impossible to repossess a property if a household included a minor (someone under 18 years of age). This allowed many people to play the system to avoid having their property repossessed.
The new laws should reduce the time taken to repossess property to a few months – and it will help the banks deal with the ‘strategic defaulters’ (those who can pay but who refuse to do so) such as property developers by enabling them to recover and sell their unsold assets to recover the money they are owed. They also include methods by which loans can be restructured to enable those in real financial difficulty to service their loans.
I expect the details of the new laws will become available after they’ve been approved by the troika.
Can the president veto this one too.
Does this mean people will never lose their homes due to hidden developer mortgages. Or does it mean they will come up with another cunning plan after June 10.
When can homebuyers expect their title deeds.
Maybe the quake has shook some sense into them. Only time will tell (normally a very short time).
@Andrew on 2015/04/18 at 6:40 pm – According to media reports “The President of the Republic welcomes today’s decision of the House of Representatives for the insolvency framework which was in a spirit of responsibility and teamwork for the benefit of society at large.”