Insolvency and restructuring activity in the year ahead is expected to be shaped by refinancing dynamics, sector exposure and the increasing complexity of cases moving through the market.
1. Economic prospects and key drivers
Cyprus is expected to maintain moderate economic growth in 2026, supported primarily by tourism and hospitality, real estate, professional services and financial services. These sectors continue to play a central role in economic performance and remain attractive to both domestic and international investors.
Within the banking sector, ongoing consolidation is expected to influence market activity in the short term. As institutions focus on integration and governance frameworks, non-performing loan resolution activity may slow temporarily. Over the medium term, however, consolidation is anticipated to strengthen credit oversight, improve governance standards and enhance debt recovery capabilities. As a result, overall credit quality indicators, including non-performing loans and arrears, are expected to continue improving.
2. Local insolvency activity and creditor tools
Local insolvency levels are expected to remain contained, with distress concentrated in specific sectors rather than spread across the wider economy. Hospitality, construction and real estate-linked businesses continue to experience pressure, particularly where leverage remains high and refinancing options are constrained. These challenges are most evident in cases involving legacy debt structures or delayed recovery in asset values.
Credit Acquiring Companies continue to favour consensual restructuring approaches and foreclosure strategies, reflecting a preference for value preservation and negotiated outcomes where possible. However, as more complex cases move through the system in the upcoming year, some will require structured solutions such as receiverships and liquidations, leading to a modest overall increase in formal insolvency appointments during 2026.
Within this environment, our Cyprus team remains one of the key partners of local banks and Credit Acquiring Companies, supporting creditor strategies as cases evolve and more structured solutions are required.
3. Cross-border insolvency
Cross-border insolvency work remains a consistent and strategically important area of activity, reflecting Cyprus’s position as an international holding-company jurisdiction. Activity involving Russian-linked structures remains constrained due to international sanctions arising from the Russia–Ukraine conflict. Despite this, Cyprus remains a focal point for international investment flows and restructuring activity.
Court-appointed liquidations, provisional liquidations and interim receiverships are regularly used in this context to preserve value, establish control and support the resolution of cross-border disputes.
Through our extensive network of law firms and financial services providers, our team has developed strong experience in navigating the procedural and practical challenges associated with multi-jurisdictional matters.
Outlook
Looking ahead, the Cyprus insolvency market is expected to remain measured rather than volatile. Any increase in n formal procedures are likely to reflect the natural progression of more complex cases rather than any widespread deterioration in economic conditions.
This reinforces the importance of early engagement, pragmatic restructuring strategies and the careful deployment of formal insolvency tools where consensual outcomes are no longer achievable.
If you would like to discuss any of the issues raised in this article or find out how we can help you or your clients please get in touch.
