European Union: Insolvency/Bankruptcy

Cyprus has enacted Law 112(I)/2026, introducing significant amendments to its Personal Insolvency Laws that broaden eligibility criteria for Debt Relief Orders and Personal Repayment Plans. The reforms strengthen protections for debtors and guarantors while simplifying evidential requirements, fundamentally reshaping how individuals can address overwhelming debt obligations.

The European Union's Directive (EU) 2026/799 introduces the pre-pack procedure to address the longstanding fragmentation of national insolvency laws across Europe, aiming to preserve viable businesses that would otherwise be dismantled due to timing mismatches between corporate crises and market reactions. This two-stage mechanism promises to reduce legal uncertainty and stabilize the EU single market, but raises critical questions about moral hazard, confidentiality, and the corporate governance structures

The new regime will apply automatically to sub-participation agreements signed after the law takes effect, though parties can contract out of it. For agreements already in place, it doesn't apply automatically, consistent with non-retroactivity, but parties can choose to opt in.