Workout Process (Restructurings / DTAs / Tax Due Diligence)

Our firm can offer legal aid and tax due diligence procedures for a debt Workout Process to take place through a Loan Restructuring and/or through a Debt To Asset swap (DTAs), in accordance with Cyprus Law.

The aim of the debt Workout Process or debt restructuring will be essential where:

  • the current debt is not performing.
  • there is potential for performance after the workout;
  • the value of the business and/or the debtor’s assets have fallen below the par value of the debt;

A key part of a Workout Process will almost always involve a restructuring of the debt. The objective in the debt restructuring will be to reduce the financial risk faced by the debtor and provide immediate treatment of the creditor’s negative balance sheet. To perform any Workout Process, it is essential for our firm to perform a Tax Due Diligence investigation on the debtor to assess whether a Workout Process would be viable or not.

The aim of the tax due diligence is the analysis of the debtor’s tax treatment in respect of its consistency with Cyprus Tax Law, other related legislation and any directives that are issued by the Cypriot Ministry of Finance. Our services in respect to tax due diligence include in particular, an analysis of the debtor’s tax obligations and social security contributions in order to identify all the relevant risks.