Evaluating Malta's Pre-Insolvency Act and Insolvency Practitioners Act in light of UNCITRAL's legislative recommendations on insolvency of MSEs : a critical analysis

Abstract

Corporate rescue is an essential part of any insolvency regime, which offers businesses the opportunity to reorganise their affairs and be granted a lifeline in light of financial distress and likelihood of insolvency. Whilst some may see rescue as a purely internal affair amongst the business and its stakeholders, its chances of success are enhanced if it is done through a fully fledged reorganisation regime. Consequently, this study analyses Malta’s newly introduced reorganisation regime against the United Nations Committee on International Trade Law’s legislative recommendations for a simplified insolvency regime for Small and Micro sized Enterprises. This Thesis is divided into seven chapters. Chapter I builds on this general introduction through a literature review and methodology detailing the legal research methods utilised to answer the research question. Chapters II to VI analyse various elements of the regime, including the institutional framework set up by the regime, pre-commencement and post-commencement aspects, debtor-in-possession and the reorganisation plan. Chapter VII brings together all the aforementioned analysis, and concludes the study by the proposition of the author’s four distinct recommendations to further develop the new regime. Chapter VII brings together all of the above analysis, and concludes the study. The research findings evidence that the framework is adequate enough to achieve its objective of modernising insolvency law but that regardless of this observation, one must wait to see how the Maltese commercial demographic reacts to the procedure. Nonetheless, seek betterness and to perfect the procedure set forth by the regime, the author makes four distinct recommendations, relating to the introduction of early warning tools, the introduction of creditor commencement of proceedings, the use of self-modifying reorganisation plans and the use of deemed approval in the context of interim financing.