The policy and practical considerations in Maltese Corporate Insolvency Law since its implementation

Abstract

Malta’s law on insolvency is regulated in the Companies Act and was promulgated in Act XXV of 1995. This Thesis sets out to analyse the policies underpinning Malta’s insolvency regime and assess whether they are fulfilling the overall goals of an efficient insolvency law. Alongside the various policy considerations, certain practical aspects will also be explored. The first chapter of the Thesis begins with a discussion regarding the history of Malta’s various insolvency regimes over the years with specific regard to the main characterising policies in each one. Following this, the key aims, principles and policies of a contemporary insolvency regime are analysed in order to paint a broad picture of what an insolvency regime attempts to do. Specific reference is made to English literature due to the fact that Act XXV of 1995 was inspired by developments in the UK. The second chapter explores the major aim of a contemporary insolvency regime; the maximisation of returns to the creditors. Such an aim is exceedingly broad, and therefore encompasses the major part of this study. This chapter is divided into two main parts: the collective nature of the insolvent winding up procedure and the identification of the property to eventually be realised for the benefit of the creditors. Chapter three explores Malta’s main policies concerning the ranking and distribution of the proceeds realised from the sale of the assets of the insolvent corporate entity to the creditors. Specific reference is made to certain prioritised claims given to the Director of Income Tax in Malta. Chapter four explores the various sanctions that are imposed on delinquent directors and other officers of the company. These are categorised according the nature of the punishment. Specific reference is made to developments made in the UK and whether such will benefit the Maltese Insolvency Regime. This is followed by the executive conclusions and recommendations.