Insolvency proceedings of Maltese companies : a critical overview of selected issues with particular reference to recent jurisprudence

Abstract

The Companies Act (chapter 386 of the laws of Malta) was enacted in 1995. Today, twenty years later, some practitioners believe that a review in the light of judicial experience is due. In this thesis the author will be examining the substantive and procedural provisions of the Maltese Companies Act which deal with insolvency, the way such provisions have been applied by local courts, and the possibility of improvements. The first chapter will delve into Maltese law as it currently stands as well as the critique included in the relevant judgments of our courts. The initial aim here will be to give a brief overview of the way the winding up procedure is carried out. Emphasis is placed in the provisions relating to how a company is declared as being insolvent. This is followed by a critical analysis of the said provisions with specific reference to any flaws or inefficiencies in the process. Jurisprudence will play a major role in this chapter since it is our courts that experience any inefficiencies first hand on a day-to-day basis. The second chapter involves an analysis of two offices which play an important role in the winding up process, those of the Official Receiver and Provisional Administrator. Where relevant, the author includes a direct comparison between the Maltese and the British insolvency provisions. This comparative approach is used throughout the dissertation. The objective here will mainly be to highlight the differences between the two jurisdictions and attempt to extract better solutions for the Maltese position through a thorough analysis of such differences. In chapter 3, the various possible outcomes which insolvent companies may be faced with, are discussed and scrutinised. Here, the requirements for a successful company recovery procedure application are given a lot of importance. To this effect, an analysis of the relevant jurisprudence is made in order to investigate whether the company recovery procedure is in fact too restrictive to be practical considering the fact that it has only been invoked a handful of times since its enactment in local legislation. The fourth chapter is dedicated to the rights of creditors involved in insolvency proceedings. Since the entire winding up process is modelled around the protection of these rights, the author makes a number of proposals aimed at improving the present situation in this regard. The central objective of this dissertation is to highlight those areas in the local legislative framework which are not serving their purpose as well as they should be. Where the author sees that there is a practical solution which could be resorted to, it is proposed.