Early in October, three new Bills were tabled to Parliament: a Bill to amend the Commercial Code provisions on Bankruptcy, a Pre-Insolvency Bill, and a Bill to regulate Insolvency Practitioners. These Bills intend to partially transpose the EU Directive 2019/1023 on preventive restructuring frameworks. The aim of the Directive is to encourage Member States to implement measures that enable the early detection of financial difficulties to avoid insolvency altogether, failing which, there could be a smoother transition into insolvent liquidation.

Just before going into summer recess Maltese Parliament held the first reading of three Acts which, once adopted, are bound to start changing the Maltese insolvency law landscape. These Acts will be amending the Commercial Code and will be introducing a new Insolvency Practitioners Act and a Pre-Restructuring Act.

This is the Malta contribution published in a report by the AIJA (International Association of Young Lawyers) Insolvency Commission – November 2020

1. What emergency measures in insolvency or restructuring legislation has Maltaadopted to help businesses cope with the economic crisis caused by the COVID-19pandemic?

The Maltese economy has proved to be somewhat resilient in the wake of global crises thus far. Having withstood one of the worst financial crises in 2008, Maltese entrepreneurs and investors in the Maltese economy were led to believe that Isaac Newton’s third law of motion, which states that “what goes up, must come down”, does not apply to the Maltese economy. Yet the Maltese economy does not appear to be immune to COVID-19, as the global pandemic is now causing its vulnerabilities to come to light.

On 15 September 2020, the Minister for the Economy, Investment and Small Businesses issued the Companies Act (Suspension of Filing for Dissolution and Winding Up) Regulations, 2020 (the “Regulations”). These Regulations have been anticipated ever since the publication of Bill 128 of 2020 and introduce a number of changes to Malta’s insolvency laws in light of the COVID-19 pandemic. These changes are summarized and commented upon below.

Suspension of Rights to File for Dissolution