This article is part of a series exploring court actions available under the Companies Act (Chapter 386 of the Laws of Malta). Each article gives a practical overview of a specific legal remedy or procedure involving court supervision; outlining when it applies, the steps required, and the purpose behind it. It is intended as a useful reference point rather than an in-depth academic analysis.
When a winding up application is filed before the Maltese courts, the company in question does not instantly enter liquidation. However, certain legal protections may immediately come into play, including the possibility of pausing other court cases that are pending against the company.
Under the Companies Act (Chapter 386 of the Laws of Malta), once a winding up application is filed but before a winding up order is made, the company, any creditor, or any contributory may apply to the court to stay (i.e. suspend) ongoing judicial proceedings against the company. The court has discretion to grant this stay and may impose any terms it deems appropriate.
This mechanism helps preserve the company’s position and prevents piecemeal enforcement actions by individual creditors while the court decides whether the company should be wound up. It also protects the collective nature of the liquidation process, ensuring that all creditors are treated fairly and in accordance with insolvency rules.
A winding up application opens the door to wider legal consequences and the court has the power to suspend litigation against the company while that application is pending.
Explore further: Is court involvement needed to wind up a company? If so, when and why?
This document does not purport to give legal, financial or tax advice. Should you require further information or legal assistance, please do not hesitate to contact Dr Jonathan Abela Fiorentino.