{"id":108890,"date":"2025-07-08T10:46:55","date_gmt":"2025-07-08T10:46:55","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=108890"},"modified":"2025-08-20T15:06:43","modified_gmt":"2025-08-20T15:06:43","slug":"malta-restructuring-insolvency","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/malta-restructuring-insolvency\/","title":{"rendered":"Malta: Restructuring &amp; Insolvency"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-108890","comparative_guide","type-comparative_guide","status-publish","hentry","guides-restructuring-insolvency","jurisdictions-malta"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Fenech &amp; Fenech Advocates<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/fenech.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">Fenech &amp; Fenech Advocates<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2019\/03\/fenech.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Restructuring &amp; Insolvency laws and regulations applicable in Malta<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What forms of security can be granted over immovable and movable property? What formalities are required and what is the impact if such formalities are not complied with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In terms of Maltese law, security can take the form of:<\/p>\n<ul style=\"padding-left: 0\">\n<li>Special privileges and special hypothecs over immovable property;<\/li>\n<li>General hypothecs over all of the property of the debtor, both present and future;<\/li>\n<li>Pledges of movable assets including shares in companies and\/or bank accounts;<\/li>\n<li>Security by title transfer of movable property (both tangible and intangible) With particular reference to registered trademarks the Trademarks Act 2019 (Chapter 597 of the Laws of Malta) and the Trademark Rules allow the registration of rights in rem over registered trademarks when these are transferred by way of security; and<\/li>\n<li>Mortgages over ships and aircraft.<\/li>\n<\/ul>\n<p>Privileges and hypothecs must be registered in the public registry and will not have legal effect if not so registered. Privileges give a first ranking right over immovables, followed by special hypothecs and both follow the property on a transfer of title unless discharged. General hypothecs attach to the general assets of a debtor but do not preclude the sale and transfer of those assets and will not continue to attach to the assets on transfer.\u00a0 Pledges and security by title transfer arrangements give a first ranking right over the movable assets pledged or transferred and can be constituted by private writing without any registration formalities (except where required as a result of the nature of the asset \u2013 e.g. trademarks as mentioned above).\u00a0 A special regime regulating the pledge of shares applies in terms of the Companies Act which includes a notification formality with the registry of companies. A pledge of shares will be of no effect vis-\u00e0-vis third parties (e.g. a purchaser of the shares in good faith) if not so notified.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What practical issues do secured creditors face in enforcing their security package (e.g. timing issues, requirement for court involvement) in out-of-court and\/or insolvency proceedings?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Outside of a restructuring or insolvency context, depending on the type of security, enforcement will differ and can create practical challenges.<\/p>\n<p>Generally speaking, creditors seeking to enforce their security against the debtor\u2019s assets are required to proceed through court to obtain a court judgment and potentially force the sale of the assets through a judicial sale by auction mandated by the court. Exceptions apply in relation to aircraft where rights to enforce security over aircraft assets can be exercised without leave of court.<\/p>\n<p>In the case of security by title transfer however, ownership is transferred to the creditor upon the security being created, with possession being retained by the creditor and therefore without prejudice to the relevant agreement, there is no need to resort to court for enforcement in an event of default as the creditor may upon giving notice in writing to the debtor be entitled to realise the property by sale or setting off or netting their value, if so agreed.<\/p>\n<p>The enforcement of a pledge of shares is specifically regulated in the Companies Act and in an event of default, without prejudice to applying for a judicial sale by auction of the shares, the pledgee may upon giving notice by judicial act to the pledgor and the company, dispose of the shares or appropriate and acquire them himself, in settlement of the debt due to him or of\u00a0 part thereof.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What restructuring and rescue procedures are available in the jurisdiction, what are the entry requirements and how is a restructuring plan approved and implemented? Does management continue to operate the business and \/ or is the debtor subject to supervision? What roles do the court and other stakeholders play?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Maltese law provides for the following restructuring procedures:<\/p>\n<ol style=\"padding-left: 0\" type=\"i\">\n<li>The Company Recovery Procedure in terms of Article 329B of the Companies Act (Chapter 386 of the Laws of Malta) (the \u201c<strong>Companies Act<\/strong>\u201d);<\/li>\n<li>Company Reconstructions in terms of Article 327 et seq of the Companies Act; and<\/li>\n<li>The Preventive Restructuring Procedure in terms of the Pre-Insolvency Act (Chapter 631 of the Laws of Malta) which partially transposes Directive (EU) 2019\/1023 of the European Parliament and of the Council of 20 June 2019 on preventive restructuring frameworks, on discharge of debt and disqualifications, and on measures to increase the efficiency of procedures concerning restructuring, insolvency and discharge of debt, and amending Directive (EU) 2017\/1132 (Directive on restructuring and insolvency) (the \u201c<strong>Directive<\/strong>\u201d).<\/li>\n<\/ol>\n<p>The Company Recovery Procedure can be relied upon when a company is insolvent or imminently likely to become so, whilst the Preventive Restructuring Procedure can be availed of when there is a likelihood of insolvency but the debtor is still viable. The directors of a company undergoing a Company Recovery Procedure are displaced during such procedure and their responsibilities are assumed by a special controller appointed by the court. With respect to the Preventive Restructuring Procedure, officials of the debtor remain involved, however most decisions and actions must be taken in consultation with the Insolvency Practitioner appointed by the court pursuant to the filing of the preventive restructuring application.<\/p>\n<p>Both the Company Recovery Procedure and the Preventive Restructuring Procedure are court processes but depending on the type of preventive restructuring procedure chosen (which ultimately depends on the extent of the restructuring plan proposed), the Court\u2019s involvement will differ.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a debtor in restructuring proceedings obtain new financing and are any special priorities afforded to such financing (if available)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In terms of a company recovery procedure, new financing for the purposes of implementing a recovery plan can be obtained if included in the recovery plan approved by the court. This financing is protected in the sense that, the\u00a0 providers of the new financing will, in\u00a0 the\u00a0 absence\u00a0 of\u00a0 fraud,\u00a0 be\u00a0 exempt\u00a0 from\u00a0 civil\u00a0 or\u00a0 criminal liability arising in the event that the company recovery procedure were to fail and the company were to go into insolvent liquidation.<\/p>\n<p>In terms of law, in the event that the company does not successfully recover and must resort to insolvent liquidation and winding up, the Court will have regard to a general order of priority\u00a0 with respect to the costs, expenses and charges incurred in the winding up and this in terms of Article 258 of the Companies Act which specifies that any new financing granted to the company for the purpose of the company recovery procedure would rank last in this respect.<\/p>\n<p>With regard to the preventive restructuring procedure, new financing can be given to the debtor if it is necessary to implement the restructuring plan and does not unfairly prejudice the interests of the creditors who have been classified as \u201caffected parties\u201d. Protections for this new financing exist in terms of Article 20 of the Pre-Insolvency Act which states that any interim financing acquired by the debtor, or any new financing forming part of a restructuring plan that is duly confirmed in terms of the Pre-Insolvency Act shall, in the case of any subsequent insolvency proceedings in respect of the debtor:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>not be declared void, voidable, or unenforceable;<\/li>\n<li>not constitute a basis for any claim or allegation of wrongful trading or fraudulent preference in terms of the Companies Act, that may be brought against the debtor; and<\/li>\n<li>the grantors of such new or interim financing shall not incur liability on the grounds that such financing is detrimental to the creditors of the debtor.<\/li>\n<\/ol>\n<p>Any agreement howsoever formulated that purports to limit these protections shall be null and void.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a restructuring proceeding release claims against non-debtor parties (e.g. guarantees granted by parent entities, claims against directors of the debtor), and, if so, in what circumstances?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, in terms of a preventive restructuring procedure, a debtor may choose to exclude certain claims from a restructuring plan if it is clear that those claims would likely be paid in full in the event that the plan is not confirmed or if the exclusion is justified by the debtor\u2019s economic situation, for example when the debt is secured by the debtor\u2019s assets. The restructuring plan must clearly explain the criteria for excluding any claims and the court must be satisfied that the exclusion is justified in terms of law and does not unfairly prejudice the excluded creditors. Creditors whose claims are not excluded are considered \u201caffected parties\u201d under the restructuring plan and the Pre-Insolvency Act.<\/p>\n<p>In terms of the company recovery procedure, the law does not expressly regulate the exclusion or release of claims from the company recovery plan but rather generally states that the plan shall include all proposals required to enable the company to continue as a viable going concern, with such explanations as may be required to give effect to such recovery, including proposals in relation to financial resources, including new financing, the retention of employees and the future management of the company. It should also explain the proposed manner of paying creditors the whole or a proportion of their claims, whether a voluntary compromise or arrangement has been reached with all the creditors, or propose to the Court to sanction a compromise which has not yet been approved by all the creditors and shall include the position of the creditors with regard to the said proposals.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do creditors organize themselves in these proceedings? Are advisory fees covered by the debtor and to what extent?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In a company recovery procedure, Article 329B states that creditors with different interests should be treated in separate classes which reflect those interests.<\/p>\n<p>Similarly, in a preventive restructuring procedure, all creditors are organised into classes to distinguish between their varying economic interests, as the Insolvency Practitioner deems necessary. At the minimum, classes shall distinguish between holders of secured and unsecured claims, holders of claims for the payment of wages (which do not constitute privileged claims over the assets of the debtor), holders of subordinated claims and holders of shares, equity or other ownership rights in the debtor. Special regard must be had to the protection of vulnerable creditors such as workers and small suppliers. These classes can be further divided if need be but all creditors in the same class must be treated equally in terms of law, except insofar as detrimental treatment is expressly agreed upon.<\/p>\n<p>In terms of the Pre-Insolvency Act, transactions which are reasonably entered into by the debtor which are directly necessary for the negotiation of the restructuring plan in the course of a preventive restructuring procedure or for the implementation of a restructuring plan that has already been confirmed such as fees and costs for the provision of professional advice closely connected with the restructuring and the payment of workers\u2019 wages for work already carried out shall not be declared void or voidable in the event that the debtor has to ultimately be liquidated on an insolvent basis due to the failure of the restructuring procedure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the test for insolvency? Is there any obligation on directors or officers of the debtor to open insolvency proceedings upon the debtor becoming distressed or insolvent? Are there any consequences for failure to do so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Rather than \u201cinsolvency\u201d, the Companies Act speaks of a company being \u201c<em>unable to pay its debts<\/em>\u201d or \u201c<em>imminently likely to become unable to pay its debts<\/em>\u201d and a company is deemed to be unable to pay its debts in terms of one of the following two tests:<\/p>\n<ol style=\"padding-left: 0\" type=\"i\">\n<li>if a debt due by the company has remained unsatisfied in whole or in part after twenty-four weeks from the enforcement of an executive title (such as a judgment) against the company by any of the executive acts specified in article 273 of the Code of Organization and Civil Procedure (Chapter 12 of the Laws of Malta) (the \u201c<strong>Code of Organization and Civil Procedure<\/strong>\u201d); or<\/li>\n<li>if it is proved to the satisfaction of the court that the company is unable to pay its debts, account being taken also of contingent and prospective liabilities of the company.<\/li>\n<\/ol>\n<p>Whilst the first test specified above is likened to the \u201ccash-flow\u201d insolvency test under English law and is an objective test as there needs to be some sort of executive act in place for a specific amount of time, the second test is likened to the \u201cbalance sheet test\u201d and is more subjective and requires the court to make a determination as to the contingent and prospective liabilities of the company as a whole to determine whether a company has \u201c<em>reached the point of no return<\/em>\u201d that it warrants its insolvent liquidation.<\/p>\n<p>Whilst there is no obligation on the debtor becoming insolvent to file for insolvency, Article 329B of the Companies Act imposes a duty on directors of a company \u00a0when they become aware that the company is unable to pay its debts or is imminently likely to become unable to pay its debts (i.e. at least veering towards insolvency), to immediately and in any case not later than thirty days from when the fact became known to them, convene a general meeting of the company for a date not later than forty days from the date of the notice to\u00a0 that effect, in order to review the company\u2019s position and determine the steps which should be taken to deal with the situation including determining whether the company should be dissolved or whether the company should make a company recovery application in terms of article 329B of the Companies Act.<\/p>\n<p>Despite the lack of a positive obligation to file for insolvency proceedings (be it liquidation or the company recovery procedure), such delay in filing when required may expose the directors of the company to personal liability actions such as wrongful trading being brought against them when all is said and done.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What insolvency proceedings are available in the jurisdiction? Does management continue to operate the business and \/ or is the debtor subject to supervision? What roles do the court and other stakeholders play? How long does the process usually take to complete?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The insolvency proceedings available in terms of Maltese law are:<\/p>\n<ul style=\"padding-left: 0\">\n<li>dissolution and consequent liquidation which can be voluntary or through the court;<\/li>\n<li>bankruptcy proceedings for sole traders and other commercial partnerships other than companies;<\/li>\n<li>company recovery procedure; and<\/li>\n<li>preventive restructuring procedure.<sup>1<\/sup><\/li>\n<\/ul>\n<p>Timing in terms of these procedures can take years to complete depending on the complexity of the case at hand. Since most of the procedures are court driven procedures, they typically take at least 2-3 years from filing of the relevant application, even in the most straight forward of cases. While the overall timeline for preventive restructuring procedures in Malta is still evolving, the law does set clear limits on how long a preventive restructuring order can remain in effect. The first case of its kind in Malta was concluded recently and within a relatively short period of approximately five months. It is worth noting that this case involved a pre-formulated restructuring procedure, meaning the restructuring plan had been prepared in advance and timing may therefore differ in the context of a \u201cstandard restructuring procedure\u201d, for example.<\/p>\n<p><em><u>Dissolution &amp; Liquidation <\/u><\/em><\/p>\n<p>With respect to dissolution, the moment a company is dissolved, the directors should only continue to trade to the extent that this is in the best interest of creditors and will facilitate the liquidation. The moment a liquidator is appointed however, the directors are displaced and all the powers of the directors and of the company secretary cease, except as otherwise stated in the Companies Act.<\/p>\n<p>If the liquidation is a court liquidation, it is the official receiver (public official) who is initially appointed as the liquidator of the particular company. The Court oversees the process and the official receiver must report periodically to the court in sittings held for that purpose. Once the liquidation is complete the Court will approve the winding up on the basis of the liquidator\u2019s final report and scheme of distribution (if any), will approve the payment of the official receiver\u2019s fees and costs out of the assets of the company in priority to all other debts and, following the distribution of any assets remaining, order that the name of the company be struck off the company register.<\/p>\n<p>The liquidation need not be court driven and can take the form of a voluntary winding up. In an insolvency scenario, this would be a \u201cvoluntary creditors\u2019 winding up\u201d and necessitates the appointment of a liquidator to control the process. There is also the option for the creditors\u2019 to appoint a liquidation committee to oversee the liquidator\u2019s actions.<\/p>\n<p><em><u>Bankruptcy Proceedings <\/u><\/em><\/p>\n<p>In bankruptcy proceedings, once a bankruptcy trustee is appointed, s\/he takes the bankruptcy estate under her\/his possession and control.<\/p>\n<p><em><u>Company recovery procedure <\/u><\/em><\/p>\n<p>This is a court controlled procedure managed under the direction of a special controller appointed by the court for a four-month period which may be extended by further four-month periods on good cause being shown, provided that the aggregate additional periods do not exceed a further eight months. Once a company recovery order is given, the special controller must carry on the normal activities of the company under his management and take into his custody or under his control any property of the company and be responsible to manage and supervise its activities.<\/p>\n<p>On\u00a0 the\u00a0 appointment\u00a0 of\u00a0 the\u00a0 special\u00a0 controller,\u00a0 any power conferred on the company, its directors or its officers by any law, the Companies Act or by the\u00a0 Memorandum\u00a0 or\u00a0 Articles\u00a0 of\u00a0 Association\u00a0 of the company concerned, will be suspended unless the consent of the special\u00a0 controller\u00a0 to\u00a0 exercise\u00a0 such\u00a0 power\u00a0 has\u00a0 been obtained, which consent may be given either generally or\u00a0 in\u00a0 relation\u00a0 to\u00a0 a\u00a0 particular\u00a0 case. During the time that the company recovery procedure is in effect, any duty conferred on the company or its officers including its directors, shall be assumed and exercised by the special controller.<\/p>\n<p><em><u>Preventive Restructuring Procedure<\/u><\/em><\/p>\n<p>An Insolvency Practitioner has to be appointed and engaged by the debtor to be able to instigate a preventive restructuring procedure but the company\u2019s officials remain heavily involved.<\/p>\n<p><u>Footnote(s):<\/u><\/p>\n<p><sup style=\"font-size: 9px\">1<\/sup> <span style=\"font-size: 12px\"> This is not technically an \u201cinsolvency\u201d proceeding but is a \u201cpre-insolvency\u201d proceeding.<\/span><\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What form of stay or moratorium applies in insolvency proceedings against the continuation of legal proceedings or the enforcement of creditors\u2019 claims? Does that stay or moratorium have extraterritorial effect? In what circumstances may creditors benefit from any exceptions to such stay or moratorium?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><em><u>Liquidation <\/u><\/em><\/p>\n<p>No automatic stay against the continuation of legal proceedings exists but in a court winding up, at any time after the filing of a winding up application and before a winding up order has been made, the company or any creditor or contributory, may apply to the court for a stay of judicial proceedings pending against the company, and the court may stay those proceedings accordingly on such terms as it thinks fit.<\/p>\n<p>Moreover, when a company is being wound up by the court, any act or warrant, whether precautionary or executive, barring a warrant of prohibitory injunction which is issued or carried into effect against the company after the date of its deemed dissolution, shall be void.<\/p>\n<p>Where a winding up order is given by the Court, no action or proceeding shall be proceeded with or commenced against the company or its property except by the leave of the court and subject to such terms as the court may impose.<\/p>\n<p><em><u>Bankruptcy <\/u><\/em><\/p>\n<p>The execution of claims of a monetary nature against the bankrupt or his estate shall be stayed upon the delivery of a judgment by the Court declaring the trader is bankrupt.<\/p>\n<p><em><u>Company Recovery Procedure<\/u><\/em><\/p>\n<p>In terms of the Companies Act, once a company recovery order is given:<\/p>\n<ul style=\"padding-left: 0\">\n<li>the company cannot pass a resolution to wind up and any pending or new winding up application shall be stayed;<\/li>\n<li>the execution of claims of a monetary nature against the company shall be stayed;<\/li>\n<li>lease agreements cannot be terminated except with leave of the court and in general no other steps may be taken to enforce any security over property of the company except with leave of thew Court and subject to the terms the Court may impose;<\/li>\n<li>no precautionary or executive act or warrant in terms of Maltese law shall be made or continued against the company except with leave of the Court; and<\/li>\n<li>no arbitration proceedings or judicial proceedings shall be made or continued against the company except with leave of the Court.<\/li>\n<\/ul>\n<p><em><u>Preventive Restructuring Procedure <\/u><\/em><\/p>\n<p>Between the date of filing of the application and the dismissal or provision of the preventive restructuring order by the Court, any obligation on the debtor to file proceedings which may result in a judgment for dissolution or winding up or bankruptcy shall be stayed and moreover, creditors of the debtor shall also be stayed from commencing or continuing such proceeding which may result in a judgment for dissolution and consequent winding up of the debtor, themselves.<\/p>\n<p>Once a preventive restructuring order is given, in terms of the Pre-Insolvency Act the Court also has the power to stay, suspend or disallow any act or proceeding of its own accord on becoming aware that a preventive restructuring order is in force. Moreover, for a period of four months following the date of an application, amongst other matters:<\/p>\n<ul style=\"padding-left: 0\">\n<li>the execution of monetary claims against the debtor (with the exclusion of workers\u2019 claims) shall be stayed;<\/li>\n<li>no party may exercise to the detriment of the debtor any right of termination, acceleration or modification of its obligations in terms of essential executory contracts; and<\/li>\n<li>no precautionary or executive act or warrant, arbitration or judicial proceedings shall be made or continued against the debtor.<\/li>\n<\/ul>\n<p>Certain actions against ships and aircraft including proceedings by a registered mortgage holder shall not be limited by these provisions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do the creditors, and more generally any affected parties, proceed in such proceedings? What are the requirements and forms governing the adoption of any reorganisation plan (if any)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In a preventive restructuring procedure, a restructuring plan (other than a pre-approved one) shall be submitted for adoption at a meeting of the affected parties which shall be convened by the Insolvency Practitioner and shall be approved by not less than 2\/3rds of the affected parties in each class by reference to the value of the claims.<\/p>\n<p>At this meeting, the affected parties shall have the opportunity to discuss and request clarification on the restructuring plan from the Insolvency Practitioner. If the restructuring plan is not adopted in this manner, it shall be deemed adopted if in the view of the Insolvency Practitioner it satisfies the following conditions:<\/p>\n<ol style=\"padding-left: 0\" type=\"a\">\n<li>the restructuring plan satisfies the best-interest-of-creditors test;<\/li>\n<li>the restructuring plan will not result in any class of affected parties receiving economic value in excess of the full amount of its claims;<\/li>\n<li>the restructuring\u00a0 plan\u00a0 ensures\u00a0 that\u00a0 any\u00a0 dissenting class of affected parties is treated at least as favourably as any other class of affected parties whose claims would, if the normal ranking of liquidation priorities were to be applied, rank pari passu\u00a0 with\u00a0 the\u00a0 claims\u00a0 of\u00a0 the\u00a0 dissenting\u00a0 class,\u00a0 and\u00a0 more favourably than any other class of affected parties whose claims would, if the normal ranking of liquidation priorities were to be applied, rank below the claims of the dissenting class; and<\/li>\n<li>the restructuring plan has been approved for adoption by at least one class of affected parties who would, if the normal ranking\u00a0 of\u00a0 liquidation\u00a0 priorities\u00a0 were\u00a0 to\u00a0 be\u00a0 applied, receive payment of their claims in whole or in part.<\/li>\n<\/ol>\n<p>Once the restructuring plan is approved, the Insolvency Practitioner shall make an application to the Court for the confirmation or otherwise, of the restructuring plan. Where the Court rejects the restructuring plan, it may propose amendments thereto and the Court\u2019s decision shall be subject to appeal.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How do creditors and other stakeholders rank on an insolvency of a debtor? Do any stakeholders enjoy particular priority (e.g. employees, pension liabilities, DIP financing)? Could the claims of any class of creditor be subordinated (e.g. recognition of subordination agreement)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Maltese law does not provide for one defined list of priority claims in an insolvent liquidation scenario and an analysis of a number of different pieces of legislation has to be made to compile one comprehensive list. The typical creditors in insolvent liquidations have been listed below in order of priority but this list should not be taken to be exhaustive:<\/p>\n<ol style=\"padding-left: 0\">\n<li>Costs, charges and expenses incurred in the winding up;<\/li>\n<li>Moneys due to Employees including wages and compensation for leave which the employee is entitled to or for the termination of employment or of any notice period.<\/li>\n<li>Claims by the director of social services for social security contributions.<\/li>\n<li>Tax dues under the Income Tax Management Act, the Value Added Tax Act and Duty on Documents and Transfers Act<\/li>\n<li>A creditor who has a pledge over a movable asset of the company will have a prior ranking right over such asset<\/li>\n<li>A creditor who receives an asset as security under title of security by title transfer will acquire ownership of the asset and will have a right to retain such asset on the insolvency of the debtor company.<\/li>\n<li>Special privileges and special hypothecs over immovables will give priority to the secured creditor\/s (in that order) over the immovable asset concerned. Where there are several special privileges or special hypothecs registered over the same asset they will rank in order of registration (chronologically).<\/li>\n<li>General or Hypothecs \u2013 like special| privileges and special hypothecs, these are preserved in virtue of a public deed registered at the public registry and, if so registered, grant a prior ranking right to the creditor over the assets of the debtor company in priority to non-secured creditors of the company.<\/li>\n<\/ol>\n<p>Subordination of claims is permitted in terms of the Civil Code.\u00a0 There is nothing in the Companies Act that prohibits creditors of a company from agreeing to subordinate their claims contractually or to include such subordination in a restructuring proposal in the context of a company recovery procedure.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can a debtor\u2019s pre-insolvency transactions be challenged? If so, by whom, when and on what grounds? What is the effect of a successful challenge and how are the rights of third parties impacted?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, the Companies Act caters for transaction avoidance provisions where certain transactions such as fraudulent preferences or transactions at an undervalue, whether of a gratuitous nature or an onerous nature, made within 6 months prior to the insolvent dissolution of a company may be voided unless the person in whose favour it is made, done or incurred, proves that he did not know and did not have reason to believe that the company was likely to be dissolved by reason of insolvency.<\/p>\n<p>With respect to third parties, where anything made or done in the 6 months prior to the insolvent dissolution of a company, is void as a fraudulent preference of a person interested in property privileged, hypothecated or otherwise charged to secure the company\u2019s debt, then the person preferred shall be subject to the same liabilities and shall have the same rights as if he had undertaken to be personally liable as surety for the debt to the extent of the charge on the property or the value of his interest, whichever is the less.<\/p>\n<p>Having said that and as already stated above, in the context of a debtor actually undergoing a preventive restructuring procedure in a pre-insolvency scenario, certain transactions such as interim and new financing are protected from constituting a basis for any claim or allegation of wrongful trading or fraudulent preference in terms of the Companies Act and the grantors of such financing shall not incur liability on the grounds that such financing is detrimental to the creditors.<\/p>\n<p>In terms of the bankruptcy provisions in the Commercial Code, every act transferring property (whether corporeal or incorporeal) including any renunciation of any succession or of any acquired prescription and every obligation incurred or other act by the bankrupt person which defrauds his creditors shall be null and void even though the parties interested have acted and are in good faith.<\/p>\n<p>General remedies available under civil law may also be applicable to void transactions which are carried out with intent to defraud creditors or otherwise to prejudice their rights of recovery (specifically, the <em>actio pauliana<\/em>).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How existing contracts are treated in restructuring and insolvency processes? Are the parties obliged to continue to perform their obligations? Will termination, retention of title and set-off provisions in these contracts remain enforceable? Is there any ability for either party to disclaim the contract?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>This will largely depend on the case at hand, volume of existing contracts and their terms and the liquidator or insolvency practitioner involved. In practice, many agreements include provisions which allow a party to terminate the agreement or call upon the obligation the moment the other party enters insolvency or restructuring proceedings. Having said that, it should be noted that in the context of a preventive restructuring procedure, any contractual provision within an\u00a0 executory contract (contracts where obligations remain to be performed by both parties) concluded by the debtor, that purports to allow a party to the contract to exercise, to the detriment of the debtor, any right of termination or any right to accelerate, modify, withhold or suspend the performance of its obligations in favour of the debtor, or any right to repossess any property leased, sold or granted to the debtor, solely by virtue of the debtor\u2019s commencement of the preventive restructuring procedure or any procedure in the course thereof, shall be null and void.<\/p>\n<p>The treatment of existing contracts is specifically regulated in the context of the preventive restructuring procedure. Under the Pre-Insolvency Act, when a debtor enters a preventive restructuring process, the debtor\u2019s officials together with the insolvency practitioner, must review all\u00a0executory contracts. Together they are bound to assess whether terminating or renegotiating these contracts would support the debtor\u2019s economic recovery. Employment contracts and any potential renegotiation in that respect remain governed by separate employment laws.<\/p>\n<p>If renegotiation or termination of a contract is deemed beneficial, the insolvency practitioner may invite the counterparty to engage in good-faith negotiations. If no agreement is reached, the debtor may propose\u00a0unilateral termination\u00a0of the contract as part of the restructuring plan but in such cases, the debtor is liable to the counterparty concerned for losses incurred (if any) as a result of the unilateral termination, which can be included as claims in the restructuring plan.<\/p>\n<p>Once the restructuring plan is confirmed, the unilateral termination takes effect either after three months or a shorter notice period if specified in the contract. However, this right does not extend to contracts involving\u00a0close-out netting or set-off provisions, which are protected from unilateral termination to preserve financial stability and mutual credit arrangements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What conditions apply to the sale of assets \/ the entire business in a restructuring or insolvency process? Does the purchaser acquire the assets \u201cfree and clear\u201d of claims and liabilities? Can security be released without creditor consent? Is credit bidding permitted? Are pre-packaged sales possible?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No specific conditions apply to the sale of assets or a business in these proceedings but with respect to preventive restructuring, the debtor shall not sell or in any way dispose of or encumber any assets or property without the approval of the insolvency practitioner.<\/p>\n<p>The liquidator or insolvency practitioner involved will usually either try to sell the assets privately after trying to obtain the best offer in the interest of the company and its creditors or alternatively sell such assets by public auction.\u00a0 Security attaching to assets cannot generally be released without creditor consent except in limited circumstances under the authority of the Court. In fact, Article 46 of the Pre-Insolvency Act provides for a situation where a restructuring plan has been confirmed by the Court and the debtor believes that there is a risk that the required consent of a creditor to transfer any asset or to appear to cancel or reduce any security or cause of preference enjoyed by that creditor over the assets, may be withheld, the debtor can apply to the Court for an appointment of a curator and such appointed curator may under the authority of the Court give his consent as required in the place of such creditor.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What duties and liabilities should directors and officers be mindful of when managing a distressed debtor? What are the consequences of breach of duty? Is there any scope for other parties (e.g. director, partner, shareholder, lender) to incur liability for the debts of an insolvent debtor and if so can they be covered by insurances?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Directors of Maltese companies encountering financial difficulty may face criminal or civil liabilities under a number of different provisions of Maltese law and although our insolvency law includes a number of offences which can be brought against directors and other parties involved, these are without prejudice to other offences or remedies which may exist under any other law including criminal law, such as fraud and misappropriation.<\/p>\n<p>In general, under the Companies Act, directors of a Maltese Company are expected to act \u2018<em>honestly and in good faith in the best interests of the company<\/em>\u2019 but the moment that the company is veering towards insolvency, creditors\u2019 interests and their protection should become paramount due to the fact that their actions (or omissions) during this volatile time can lead them to incur personal liability. The Companies Act includes specific provisions imposing personal liability (and in some cases sanctions of a penal nature) on \u2018wrongdoing\u2019 directors in the event of insolvency.<\/p>\n<p>In a pre-insolvency and insolvency context, the law imposes duties on directors to call certain meetings of the directors (in a pre-insolvency context) and of the shareholders (in an insolvency context). The purpose of these meetings is, in the former scenario, for the directors to discuss whether a preventive restructuring application should be filed by the debtor whilst, in the latter scenario and therefore, in a situation where the company has surpassed the pre-insolvency stage, whether a company recovery application or liquidation proceedings should be instigated by the company.<\/p>\n<p>If the officials concerned do not take the appropriate action in time or have conducted themselves in a manner which has prejudiced or defrauded creditors of the debtor in some way, they may be found liable for certain offences. Indeed, in cases of fraud, it is not only directors of the company or debtor concerned who may be found liable but also, shareholders, managers and any other persons involved in the fraudulent acts..<\/p>\n<p>In the course of a preventive restructuring, if it appears that any action of the debtor has been carried on with intent to defraud any of its creditors, insolvency practitioners or any of the creditors may make an application to the court requesting it to declare that any persons who were knowingly parties to the carrying on of the business in the manner aforesaid be personally responsible, without any limitation of liability, for all or any of the debts or other liabilities of the debtor as the Court may direct.<\/p>\n<p>In the event that a company is dissolved and wound up or enters into a company recovery procedure, directors can &#8211; if the relevant conditions subsist &#8211; be found liable for wrongful trading or fraudulent trading and be made to contribute to the assets of the company as the Court deems fit. A fraudulent trading action can be brought against \u201cany person\u201d who has conducted such fraud despite the solvency or otherwise of the company in liquidation whilst wrongful trading actions can solely be brought against directors or shadow directors of a company in the context of an insolvent winding up of the company.<\/p>\n<p>In an insolvent liquidation scenario, the Companies Act lists a number of other offences that directors and other officials may be found liable for including, not keeping proper accounting records for two years preceding dissolution or for fraudulent transactions carried out in dissolution and concealing or destroying of property of the company, for example.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do restructuring or insolvency proceedings have the effect of releasing directors and other stakeholders from liability for previous actions and decisions? In which context could the liability of the directors be sought?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, please see above.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Will a local court recognise foreign restructuring or insolvency proceedings over a local debtor? What is the process and test for achieving such recognition? Does recognition depend on the COMI of the debtor and\/or the governing law of the debt to be compromised? Has the UNCITRAL Model Law on Cross Border Insolvency or the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments been adopted or is it under consideration in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A local court will recognise foreign insolvency proceedings if instigated in the EU, in terms of the Regulation (EU) 2015\/848 of the European Parliament and of the Council of 20 May 2015 on insolvency proceedings (recast) (the \u2018<strong>Insolvency (Recast) Regulation<\/strong>\u2019) and if not in the EU, then under the provisions of the Code of Organization and Civil Procedure.<\/p>\n<p>With respect to recognition, in terms of the Insolvency (Recast) Regulation, the principle is that any judgment opening insolvency proceedings which is handed down by a court of a Member State, shall be recognised in all other Member States from the moment it becomes effective in the State where it was opened. Hence such judgment would be recognised in Malta without further formalities, unless the Insolvency (Recast) regulation specifies otherwise.<\/p>\n<p>With respect to the UNCITRAL Model Law on Cross Border Insolvency or the UNCITRAL Model Law on Recognition and Enforcement of Insolvency-Related Judgments, these have not yet been adopted and we are not currently aware that they are under consideration for adoption in Malta.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">For EU countries only: Have there been any challenges to the recognition of English proceedings in your jurisdiction following the Brexit implementation date? If yes, please provide details.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Since England is no longer in the EU, there is no automatic recognition of English insolvency proceedings or judgements in Malta.\u00a0 Accordingly, general rules and procedures regulating the enforcement of judgements of foreign (non-EU) courts apply. Naturally, cross-border insolvency challenges most commonly arise with non-EU jurisdictions.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Can debtors incorporated elsewhere enter into restructuring or insolvency proceedings in the jurisdiction? What are the eligibility requirements? Are there any restrictions? Which country does your jurisdiction have the most cross-border problems with?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In terms of the Insolvency (Recast) Regulation, this is possible for EU incorporated companies provided certain jurisdictional criteria are met and namely, if the foreign EU incorporated entity has their Centre of Main Interests (COMI) in Malta. The COMI is presumed to be the place that the company has its registered office but this presumption is rebuttable and therefore this presumption would have to be rebutted to show that the company\u2019s actual COMI is in Malta and not the location where the company is registered\/incorporated.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are groups of companies treated on the restructuring or insolvency of one or more members of that group? Is there scope for cooperation between office holders? For EU countries only: Have there been any changes in the consideration granted to groups of companies following the transposition of Directive 2019\/1023?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Maltese law does not provide for specific rules on \u201cgroup insolvencies or restructuring\u201d and therefore Maltese companies would have to be wound up or restructured, separately. There have been situations where companies file for winding up of the holding company without the winding up of the subsidiary which could create problems even though the liquidator\/official receiver of the holding company would then be able to instigate the winding up of the subsidiary in such event. For foreign group companies with companies in the EU, co-operation between office holders is regulated in the Insolvency (Recast) Regulation. In Malta, the Directive did not introduce any changes relating to group insolvencies or restructuring.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your country considering adoption of the UNCITRAL Model Law on Enterprise Group Insolvency?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not that we are currently aware of at the time of writing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any proposed or upcoming changes to the restructuring \/ insolvency regime in your country?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Not that we are currently aware of at the time of writing.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is your jurisdiction debtor or creditor friendly and was it always the case?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Malta is historically a more creditor friendly jurisdiction however the implementation of legislation in the field of preventive restructuring has balanced debtor interests and protections including the development of self-assessment tools for debtors to assist them in considering their financial position.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do sociopolitical factors give additional influence to certain stakeholders in restructurings or insolvencies in the jurisdiction (e.g. pressure around employees or pensions)? What role does the State play in relation to a distressed business (e.g. availability of state support)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Official Receiver (the Court appointed liquidator) is a state official however, most proceedings are funded by the creditors instigating any action or the debtor company itself. In many events, the tax authorities are also creditors of distressed companies and they are quite formalistic in ensuring that during a liquidation, missing documents are submitted to the tax authorities even when this is an impossible feat because the companies concerned would not have prepared or filed their accounts for years.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the greatest barriers to efficient and effective restructurings and insolvencies in the jurisdiction? Are there any proposals for reform to counter any such barriers?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Apart from a lack of awareness among officials of companies regarding responsibilities during financial distress, the length and overall costs of the proceedings as well as the costs to engage legal and financial advisors and other professionals also act as a deterrent for the majority of companies in Malta which are SMEs to seek advice in a timely manner and be pro-active in filing for insolvency or restructuring their businesses. Many companies are in fact typically abandoned and left on the register until the Registrar of Companies uses the \u201cdefunct procedure\u201d to strike off these companies from the Register of Companies rather than undergoing formal insolvency and liquidation proceedings.<\/p>\n<p>It is noted that there is currently a Companies (Amendment) Bill which has been proposed on the 17 June 2025 and is being read and debated in Parliament which is <em>inter alia<\/em> proposing a \u201csimplified dissolution procedure\u201d. Whilst this is still in its early stages and is not yet law, it is hoped that this simplified dissolution procedure will provide a simple and cheaper alternative to the current liquidation procedure for small entities who meet certain conditions and who typically do not have the funds to undergo lengthy liquidation procedures, to allow them to liquidate companies as efficiently as possible.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">7412<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/108890","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=108890"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}