Legal Notice 192 of 2020 entitled Companies Act (Company Reconstructions Fund) Regulations, 2020 (the “Regulations”) has been published to create and regulate the administration of a fund known as the Company Recovery Fund (the “Fund”). This Fund is intended to facilitate company recovery procedures instituted in accordance with article 329B of the Companies Act (the “Act”).
In a judgment delivered by the First Hall (Commercial Section) on 13 July 2020 in the case Avinco Group Holdings N.V vs Eolia Limited, the Court was asked to determine inter alia whether a winding up application based on the alleged insolvency of the respondent could be entertained in circumstances where the underlying claim of the claimant was disputed.
Malta has, to date, chosen to address corporate distress as a result of the COVID-19 pandemic by extending credit capacity through the issuance of State guarantees, thus allowing them access to financing channels that would otherwise have been impossible to secure.
The country seems now ready to jump onto the insolvency-buffer bandwagon, several weeks after the rest of the world began to enact special COVID-19 inspired amendments to their insolvency laws. Bill 128 of 2020 proposes amendments to the Companies Act which include, inter alia:
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
Cases involving the application of the Council Regulation (EC) No. 1346 / 2000 (the ‘Regulation’) have been rare before the Maltese Courts since Malta joined the European Union in May 2004. Thus far, the only instance where an issue involving the interpretation of the Regulation arose involved a maritime case – The Foreign Economic Technical Co. Operative Company of China et vs m.v.
In 2010 Malta embarked on an ambitious project to introduce the Aircraft Registration Act (the “ARA”) and to accede to the Cape Town Convention and its Aircraft Protocol. A few years later, the growing presence of AOC holders in Malta and the increase in aircraft registered in the National Aircraft Register is testament to the success story of the ARA.
This notwithstanding, there still is and will always be room for improvement, as shown by the recent Act to amend the ARA which became law in October 20161. The improvements affect four broad categories: