Michael Psaila

Imagine a business that is under pressure. Sales have dipped. A key contract is at risk. Cash is tight. The board meets and, after honest analysis, concludes the company faces a likelihood of insolvency — that is, a state of financial difficulty falling short of actual insolvency but sufficiently serious to warrant early intervention — unless decisive action is taken. Under the Pre-Insolvency Act (hereinafter the “Act”), enacted by Act XXIV of 2022 to partially transpose Directive (EU) 2019/1023 on preventive restructuring frameworks, that company may apply to the Civil Court (Commercial Section) to open a preventive restructuring procedure. The…

For many Maltese companies, financial difficulty used to mean a stark choice: muddle through and hope for the best, or head straight for insolvency. A new legal route — preventive restructuring — changes that equation by creating space to repair a viable business before it is too late. For years, the story was familiar. A business in Malta hits a rough patch — a delayed customer payment, a lost contract, a costly dispute, a run of poor trading. Directors, often with the best of intentions, focus on keeping the doors open and the payroll met. Credit stretches. Bank facilities are…