An extract from The Insolvency Review, 7th Edition
Plenary insolvency proceedings
One of the most significant insolvency proceedings in Cyprus is the liquidation proceedings of FBME Bank Ltd (the Bank). The Central Bank of Cyprus (CBC), having revoked the Bank's licence to operate a branch in Cyprus on the basis of the Resolution of Banking and other Institutions Law, filed a petition with the court pursuant to the provisions of the Business of Credit Institutions Law, seeking the special liquidation of the Bank, the headquarters of which are located in Tanzania. Both the CBC's application and the respective appeal were dismissed.
In the meantime, the Bank's licence to operate as a banking institution in Tanzania was revoked by the Bank of Tanzania, which subsequently appointed a liquidator. The Tanzanian liquidator filed an application in Cyprus seeking formal recognition of its authority to act as the liquidator of the Bank in Cyprus as well. Pending the determination of this application, the CBC filed another application seeking the liquidation of the Bank's branch in Cyprus. The second application was filed on the basis of the newly amended provisions of the Business of Credit Institutions Law, with which the definition of a licensed banking institution was amended to include a Cyprus branch of a foreign bank. Both applications are currently pending.
The cases involve complex and unprecedented legal and procedural issues, as follows:
- the relevant legal provisions for the special liquidation of banking institutions were only implemented in Cyprus in 2013. They are now being tested before the court and are subject to legislative review;
- this is the first case concerning the special liquidation of a bank in Cyprus;
- it is the first time that Cypriot courts had to decide whether they had jurisdiction to put a foreign banking institution under special liquidation, based on the fact that the institution's licence to operate a branch in Cyprus had been revoked; and
- it is the first time Cypriot courts are having to adjudicate whether the CBC or a foreign regulator (non-EU) has the authority to liquidate the Cyprus branch of a foreign banking institution.
Ancillary insolvency proceedings
There is no public information or publicly available cases regarding ancillary insolvency proceedings pending before Cypriot courts.