Modernising insolvency law and debt-restructuring in Malta

Abstract

Malta has made great strides along the years to keep abreast with the ever-increasing and exacting demands required to preserve and incentivise a thriving corporate business community. From time to time a number of legislative amendments saw the light of day that introduced reforms and additions to the current legal set up dealing with commercial law in general and certain aspects of company law that were in dire need of an update. It was on the whole a fragmented and spasmodic exercise which failed to address the various lacunae which still existed. One could not help noticing that domestic legislation in this vital area lagged behind in the sphere of insolvency law and corporate restructuring. As a result the current laws and regulations in these areas are sadly lacking and in need of an overhaul. Such a state of affairs, to put it mildly, is simply unacceptable and even harmful in many respects not only to the business sector but to the general economic performance of the country as a whole. Clearly, the time is ripe to take the initiative and follow the lead of other countries such as the United Kingdom and Italy and move towards a holistic approach through the drafting and subsequent implementation of an Insolvency and Bankruptcy Code. This goal will most certainly fail if reforms to the current laws continue to be introduced in a piecemeal, and very often half-baked or incomplete piece of legislation. Instead, a robust and comprehensive exercise is called for with a view of encompassing all areas. For this purpose a number of far-reaching proposals are being put forward in the hope that they would act as a catalyst for reform in the Maltese legislative corporate system. The overall objective is to ensure that Malta be well-equipped to face the many challenges that lie ahead in the wider context of a turbulent and ever-changing economic scenario, which has been rendered more daunting and unpredictable in the wake of the on-going global Covid-19 pandemic and beyond.