Our law provides for a number of insolvency procedures to assist distressed companies, such as compromises, CRPs, reconstructions or amalgamations. However, following attempts at these procedures, and as a last resort, companies often do go into liquidation.
During the liquidation process, a liquidator will be appointed to liquidate the assets of the company with a view of then satisfying the creditors in accordance with their ranking. Anything remaining is then distributed to the shareholders.
The Maltese insolvency regime is currently subject to an extensive overhaul with a view to bringing it in line with the restructuring frameworks directive (2019/1023). This was to be implemented by July 2021 but was then subject to an extension option. It is now likely that the expected reforms will take place throughout 2022. The overhaul will include a number of measures, however the key motivation behind the reforms is the introduction of mechanisms to help financially distressed companies save their operations and avoid bankruptcy.
Our winding up and insolvency department has gained experience over the years in the more ‘traditional’ insolvency procedures as well as been involved in the implementation of the current overhaul. We have also advised on a number of voluntary and involuntary winding liquidations when those procedures are unsuccessful. Our broad practice means that we are also able to assist clients across the spectrum from advising directors of their duties during insolvency and liquidation, court representation, advising on procedures and reconstructions as well as actual liquidator appointment and administration.
