Possible Issues When A Company Is In Financial Difficulties

A bona fide creditor may attempt to take one of the following actions to enable them to take security over assets in Cyprus:

1) Mortgage – the property under mortgage is transferred into the creditor's ownership with a right of redemption in the case of default. The property will be worth a similar amount to or equal to the amount of the mortgage.

2) Pledge – gives the lender the right to sell the asset but does not confer ownership of the asset.

3) Charge over immovable property – a fixed charge gives legal rights as security without any actual transfer of ownership.

4) Impose a floating charge on any immovable property – a floating charge 'floats' over all of the assets of the debtor, in the event of a default, the floating charge crystallises and becomes a fixed charge over the asset.