Company recovery procedure : relative amendments to the Companies Act 1995 and relevant developments in foreign legislation

Abstract

Since the introduction of the Companies Act 1995, Malta has experienced the need to implement an efficient and effective way to deal with companies in financial distress as an alternative to placing them in liquidation. In search of greater efficiency and economy when dealing with the insolvency of companies, the government has seen to the enactment of Act IV of 2003 which has introduced company recovery procedure to our legislation. ln this dissertation, the concept of 'company recovery', often referred to as 'corporate rescue', is first presented, followed by a description of the position in Malta upon the coming into force of the Companies Act 1995 and the alternatives to liquidation, if any, made available by this piece of legislation. An analysis is then made of the new provisions added to the Companies Act through the enactment of Act IV, 2003 which provide a mechanism that enables companies who satisfy certain criteria to make an attempt to get back on their feet and avoid the inevitable losses brought about by liquidation. The dissertation then takes at the formal procedures found in United Kingdom, the United States and France. Here these mechanisms have long been available and therefore have been tried and tested. However all jurisdictions constantly seek to identify any deficiencies in the aim of achieving the optimal procedure to the benefit of all concerned.