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Companies Act (Chapter 386 of the Laws of Malta). Each article gives a practical overview of a specific legal remedy or procedure involving court supervision; outlining when it applies, the steps required and the purpose behind it. It is intended as a useful reference point rather than an in-depth academic analysis.
Once a company is officially placed into liquidation by a court order, any ongoing court cases involving the company, whether filed by it or against it, may no longer proceed in the usual way.
Under the Companies Act, no legal proceedings may be continued or commenced against the company without the permission of the court. This includes enforcement actions, debt recovery suits, and other claims. The aim is to centralise all claims within the liquidation process itself.
Instead of pursuing litigation, creditors and other claimants must file their claims with the liquidator appointed by virtue of Article 228. The liquidator will assess all claims, recover and distribute assets, and apply the legal ranking of creditors according to insolvency law.
This ensures that all creditors are treated equitably and the company’s limited resources are not depleted through multiple legal actions. In this way, the court maintains control over the liquidation process and any exceptions.
The liquidator also has the right to bring or continue legal action on behalf of the company, where necessary, for the benefit of its creditors, for example, to recover debts owed to the company or challenge certain pre-liquidation transactions.
As a final point, once a winding up order is made, court proceedings against the company are halted, and claims must be redirected through the liquidation process, under the control of the liquidator and the supervision of the court.
More from this series:
- Is Court Involvement Needed to Wind Up a Company? If so, When and Why?
- Can a Legal Action be Paused Once a Company is Being Wound Up?
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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