Insolvency & liquidation : the main issues

Abstract

The CA brought about a major change in the law of liquidation, dissolution and insolvency of companies. However, although it is generally acknowledged that the sections on insolvency and liquidation entrenched in our law have gone a long way to bring us on a level with other countries having developed systems, there are still problems relating to this field. This dissertation focuses on two such problems, the ranking of creditors and the new provisions regarding fraudulent and wrongful trading. The problems regarding ranking of creditors have existed long before the enactment of the CA. However, this legislation has not attempted to remedy the situation. Research shows that it would have been better had the CA sought to solve this problem. Therefore, the omission should be corrected by, at least, incorporating privileges in a single legislation, the CA or the Civil Code. The CA introduced the provisions relating to fraudulent and wrongful trading. The dissertation attempted to discover whether the innovative nature of these provisions will prove to be a problem for Maltese insolvency practitioners. However, on analysis, it seems that the CA did not introduce situations which, under the previous law, absolutely did not exist. It just made clearer the remedies that can be obtained in these types of situations.