A civil court has declared that the former boss of More Supermarkets, Ryan Schembri, had fraudulently bound the company with a €3.5m constitution of debt contract, at a time when he no longer held legal representation of the supermarket chain.

This emerged from decisions in two civil lawsuits filed by More Supermarkets Ltd and More Holdings Ltd against Edmond Mugliett, Alexander Farrugia, and Cassar and Schembri (Marketing) Ltd, together with Schembri and Adrian Agius.

The ruling rescinded a €3.5 million debt contract that Schembri appeared on in 2014, and declared that Schembri had committed fraud when he did so, as he was no longer the legal representative of the supermarket chain.

The court also ordered that the judgement be served on several institutions, including the Commissioner for Revenue, the Financial Intelligence Analysis Unit, the Police Commissioner, and the President of the Notarial Council.

Schembri, cousin to former OPM chief of staff Keith Schembri, had fled the country in 2014 with a reported €40 million in debts left behind from the More Supermarkets crash. He is believed to have borrowed large sums of money from entrepreneurs, before finding he was unable to pay back the loans, originally intended for an ambitious import-export operation.

The civil lawsuits had been filed against Edmond Mugliett, Alexander Farrugia, Adrian Agius, Cassar and Schembri (Marketing) Ltd, and Schembri and Agius, by More Supermarkets Ltd and More Holdings Ltd.

The companies claimed that the debt agreement had been fabricated, as they had never received the loans, and that the debt was being used to avoid repayment of the loans.

Mugliett and Farrugia denied these claims, arguing that fraud had been committed by the applicants.

In a detailed judgement handed down yesterday, the First Hall, Civil Court, presided by Mr Justice Ian Spiteri Bailey, upheld Agius’s plea, ruling that he was only involved in the Hamrun branch, and was thus not implicated in the other supermarkets.

The court also drew attention to several other issues, such as a suspicious share transfer agreement and the failure of Cassar and Schembri (Marketing) Ltd to appear in court.

The court ultimately ruled that Schembri had knowingly committed fraud and that he was no longer authorised to represent the supermarket chain when he signed the debt agreement.

The court appointed a notary to draw up the deed of rescission within four months and ordered the cancellation of the general hypothec and its associated bill of exchange.