1. Supporters of Adrian Delia are trying to sell the notion that Mgarr Developments Ltd’s – a company of which he is a director, shareholder, company secretary and legal and judicial representative - €7.25 million constituted debt to HSBC Bank does not matter because it is “covered” by the unsold flats. Aside from the fact that Dr Delia has so far refused to say how many flats are unsold, the obvious answer to that should be staring them in the face. If Mgarr Developments can’t sell those flats, then they’re certainly not going to sell for anything but a knock-down price when and if the court auctions them at the request of the bank. And that means far less than the €7.25 million plus interest which the bank needs to collect.
2. Supporters of Adrian Delia are still talking about “a bank loan”. So what if his company has a bank loan, they say. I’m sure he’ll pay it back. It’s standard practice to have a bank loan for your business. They haven’t noticed that those €7.25 million are no longer a bank loan. They are now a constituted debt to which the shareholders have admitted in a deed drawn up by a notary, with the bank. In that deed, the shareholders have been forced to put themselves forwards as sureties (guarantors) in their personal capacity. This means that they now owe those €7.25 million personally, and the bank can go after any one of them for the full amount – yes, the full amount, regardless of shareholding – without the need to go to court.
3. Some supporters even mentioned limited liability. They appear to believe that the ability of a bank to recover its funds from a company is restricted to the assets owned by that company. How dangerous it is to be so innocent, naïve and uninformed. When banks grant massive loans (even when they grant smaller loans), they hold the directors/shareholders personally responsible for the money. In other words, the directors/shareholders can’t fling their hands into the air, when things go belly-up, and say, “Oh dear, we can’t pay you because the company doesn’t have sufficient assets.” The bank will go after them and sell their houses, their cars, their flats, their stocks, shares and bonds, whatever it can have seized and sold by judicial auction.
4. Some supporters of Adrian Delia have looked at the documents available in the Companies Registry (you can do that on line) and noticed that the book asset value of the company is around €14 million. This has delighted them and given them another excuse to use, though it is not much help. “The company holds twice as much in assets as it owes,” they say. Not so, chaps. That was the asset value when the land was unencumbered by flats belonging to third parties. And now that the flats have been built and sold to third parties, the land is useless to anybody else and the sold flats are no longer company assets. The most recent published accounts are for 2013. The auditor was “removed” last May.
5. It is obvious where this is heading, given that the shareholders can’t make up the €7.24 million between them and, even if they can, they will refuse to do so on the basis of their different shareholding. They are not going to flog any remaining flats (and Dr Delia still hasn’t said how many are left) for enough money to pay off the bank. The bank is going to hang about a little while longer – probably until the Nationalist Party leadership election – and then it will begin to foreclose. If Dr Delia becomes Opposition leader, the bank will need to consider its own public relations options in foreclosing on the holder of one of the highest offices in the land, a Constitutional role – and that is one of the main reasons why Dr Delia is fighting to become party leader, to save his financial skin. But the bank is not going to give up on €7.25 million and counting just to be nice to the Opposition leader. Are you happy with the idea of a judicial auction of the Opposition leader’s assets? If you don’t mind senior members of the government setting up secret companies in Panama, then you probably don’t mind this, either.
6. Do you know how much the interest is on €7.25 million? It’s almost €600,000 a year. Adrian Delia’s outfit will have to sell one flat at Mgarr Bay just to pay a year’s interest. Every day, the interest ratchets up by €1,600. Yes, €1,600 every day. People have thrown themselves off tall bridges for far less – a truly terrible thing, the fruit of the darkest despair – but Adrian Delia and Frank Portelli think they may as well have a go at becoming the Prime Minister instead. And if they hold off long enough, and the electorate stays nuts, we will have the Prime Minister’s assets sold off by judicial auction on the instructions of the banks. But as keen supporters will say in that typically Maltese way: “Allura? So what!”
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