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ARTICLE · 08 APRIL 2021

The Inability To Pay Debts Test Before The Maltese Courts

Mamo TCV Advocates
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In its recent decision Xuereb v Weber Construction Limited Et (decided 18 March 2021) the Civil Court (Commercial Section) weighed in once more on the appropriate tests to be applied when assessing a company's inability to pay ...

MaltaInsolvency/Bankruptcy/Re-Structuring
Mamo TCV Advocates
Mamo TCV Advocates
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In its recent decision Xuereb v Weber Construction Limited Et (decided 18 March 2021) the Civil Court (Commercial Section) weighed in once more on the appropriate tests to be applied when assessing a company's inability to pay its debts under Maltese corporate insolvency law. One of Weber Construction Limited's ("Weber") shareholders filed an application in court requesting the company's dissolution and consequential winding up on the grounds inter alia that it was unable to continue to pay its debts.

Article 214(2)(a)(ii) of the Companies Act, 1995 (the "Act") grants the court discretion to order the dissolution and winding up of a company where the company is "unable to pay its debts". For the purpose of this provision, a company is deemed to be unable to pay its debts if (i) a debt due by the company has remained unsatisfied (in whole or in part) after 24 weeks from the enforcement of an executive act specified under Article 273 of the Code of Organisation and

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