Maltese companies in financial distress have two options: to begin insolvency followed by bankruptcy proceedings, or to undergo corporate restructuring. Financial reorganization is the first step a company is recommended to follow before declaring its insolvency, however there are situations in which the restructuring fails and the bankruptcy is the only option left.
The Insolvency Law in Malta is comprised in the Commercial Code and applies to private and public companies. Bankruptcy, on the other hand, applies directly to sole traders and individuals in Malta. Our Maltese attorneys can offer information on the Insolvency Law.
The content of the Maltese insolvency legislation
Several years ago, the Maltese government has amended the Insolvency Law in order to allow companies unable to pay their debts to benefit from swifter procedures related to paying their creditors. The Maltese Insolvency Law provides for two types of procedures:
- – the company itself can file for liquidation or company reorganization;
- – the creditor can file for insolvency with a Maltese commercial court.
Under the insolvency legislation, once the procedures begin, the company will no longer be allowed to conclude any contracts or continue the activities undertaken until that moment.
Our law firm in Malta can offer more information on the two types of insolvency procedures which can be set off for indebted companies.
How to start insolvency procedures in Malta
Maltese companies are required to convene a shareholders’ meeting in order to vote the beginning of insolvency procedures, according to the Commercial Law. The Insolvency Law requires the shareholders to announce the creditors about their decision.
Once a resolution is adopted, the company must notify the Companies Register on the beginning of the insolvency and must also submit a list of its assets and liabilities with the Registrar. The declaration must be filed within 14 days after the decision has been made. A copy of the declaration must then be filed with the Maltese court.
Our lawyers in Malta can also offer information on how to start bankruptcy procedures as a sole proprietor. Feel free to contact our Maltese law firm for more information on the Insolvency Law.