In Riċevitur Uffiċjali fil-kapaċita' tagħha ta' stralċjarja tal-kumpanija Cassar & Schembri Marketing Ltd v. Reġistratur tal-Kumpaniji, decided by Mr Justice Ian Spiteri Bailey (Civil Court - Commercial Section) on 10 January 2025, the Court resorted to an exceptional remedy at law and ordered the restoration of the company Cassar & Schembri Marketing Ltd (C 33174) (the "Company") (which was previously dissolved by a court order and had been struck off) to the Register of Companies (the "Register"), for a limited time only, since there was a mistake in the list and ranking of creditors, so  that the Official Receiver, in her capacity as liquidator of the Company, would be able to proceed with the distribution of the assets of the Company in terms of an amended list of creditors and their ranking.

Facts of the Case

On 11 June 2024, the Official Receiver, in her capacity as liquidator of the Company, had filed an application in court asking it to order the Registrar of Companies (the "Registrar") to restore back the name of the Company on the Register, for a short period of time to be determined by the court, so that the Company can continue with its existence as if it was never struck off, and therefore enabling the Official Receiver to distribute the Company's assets according to the amended list of creditors and their ranking.

By way of background, the Company had been dissolved with effect from 28 January 2015 by the Civil Court (First Hall) on 3 November 2015, whereby a liquidator had also been appointed by the Court. Subsequently, by an order of the Civil Court - Commercial Section on 15 July 2021, the liquidator was substituted by the Official Receiver in office at the time, who was subsequently substituted by the current Official Receiver. On 1 March 2024, the Civil Court - Commercial Section had ordered the striking off of the dissolved Company with effect from the same date, and consequently the Official Receiver had been relieved from her duties.

The Applicant held that when she had submitted a note to the Court on 4 December 2023 outlining the creditors and their ranking, there was an error in the ranking due to the fact that a creditor was not listed. The Official Receiver had recently discovered that a creditor bank had two hypothecs in its favour, and therefore it had to rank before other creditors. An updated list of creditors and their ranking was therefore submitted.

The Registrar, having been notified on 19 July 2024, filed its response on 6 August 2024. The Registrar had no objections to the Applicant's pleas, as long as the Court found it just and equitable to accede to them in view of the evidence brought forward.

Judgement

The Court took note of all the documents presented to it, and considered that the mistake in the list of creditors and their ranking needs to be rectified, and therefore the Company has all interests to be restored again on the Register to allow for all the required corrections.

The Court considered Article 300B of the Companies Act (Chapter 386 of The Laws of Malta) (the "Act"), which is a relatively new amendment introduced into our law in 2003, and provides:

"(1) Where a company has been struck off the register, any interested person may, by an application, request the Court to order that the name of the company be restored to the register and the winding up be reopened.

(2) Where, on an application made in terms of sub-article (1), the Court is satisfied that the winding up and striking off of the company has been vitiated by fraud or illegality of a material nature, the Court may order that the name of the company be restored to the register and the winding up be reopened for such purposes and such period as the Court shall specify in its decision, and the Court shall give such directives and impose such conditions as it may consider appropriate.

(3) The Court shall only accede to the application where it is satisfied that this is the only remedy available.

(4) In its decision the Court shall also determine whether its orders and directives shall be effective in favour of all persons or shall apply limitedly to specified persons indicated in the decision.

(5) No application may be made under this article after the expiration of five years from the date on which the name of the company has been struck off the register."

The Court agreed that from the evidence submitted, there was a mistake in the list of creditors and their ranking due to the fact that two hypothecs a creditor bank had in its favour, had been completely ignored, but with the result that such bank had a prior ranking than other creditors. The Court concluded that since the list of creditors and their ranking was incorrect, there was naturally a defect in the winding up, which amounted to an illegality of a material nature. The Court was satisfied that five years had not elapsed from the date when the Company had been struck off the Register - in fact, there was agreement on this between the parties. The Court held that the only way the necessary corrections outlined in the application could be made, was by acceding to such application.

The Court also quoted Profs. Andrew Muscat's Principles of Maltese Company Law (Second Edition, Vol. I):

"A liquidator who, whether negligently or fraudulently, fails to take into account a pending claim will, it is submitted, have acted unlawfully. After all, in terms of general principles of law, a person who does not use prudence, diligence and attention of a bonus pater familias and causes damage as a result is deemed to have acted unlawfully. Moreover a liquidator is clearly bound by law to take into account all pending claims against the company (daqstant iehor kull ass attiv), and if he fails to do so through negligence, imprudence or want of attention he should also be deemed to have acted unlawfully.",

and proceeded to deliver judgement, by acceding to the Applicant's requests.

The Court therefore:

1.      ordered that the name of the Company be re-inserted in the Register by not later than two weeks from the date of judgement;

2.      ordered that the winding up process of the Company be reopened limitedly for the necessary steps and measures to be taken so that the list of creditors and their ranking is corrected to reflect the hypothecs in favour of the creditor bank;

3.      appointed the Applicant to assume all functions, powers and obligations of a liquidator for the Company; and

4.      ordered the Applicant to do all that is necessary in order to take all necessary steps and measures so that the list of creditors and their ranking is amended according to the following conditions:

a)      that the correction process and the finalisation of the winding up process of the Company must be completed within a maximum of eight months from the date of judgement, and after this period the Registrar shall have the power to strike off again the name of the Company from the Register;

b)      in the event that the necessary corrections are concluded before the lapse of the eight months, the Applicant must inform the Registrar of such so that the latter can proceed with the striking off of the name of the Company from the Register; and

c)      made it clear that these orders are in no way meaning that the Court gave or is giving a carte blanche to the Company and/or its officers/and/or its liquidator to do anything else, other than that ordered by the Court in this judgement, and is therefore making it clear that within the maximum period provided here, the Company can only make the required corrections mentioned here, and nothing else.

The Court assigned all costs of these proceedings, as well as any other costs that may be borne by the Registrar to restore the name of the Company to the Register and eventually to strike it off again, to the Applicant.

Stephanie Jean Coppini is an Associate at Ganado Advocates

Disclaimer: Ganado Advocates is responsible for contributing this law report but was not in any way involved as legal advisor for the parties in the judgement being covered in this law report.

 Added by the Court.