Regulations to address company solvency presented in new bill

Safeguarding the interests of debtors, creditors and shareholders was of the utmost importance in cases of solvency of companies and businesses, but the employees should also be protected as much as possible, Finance Minister Edward Scicluna said on Tuesday.

Scicluna, who was speaking in Parliament at the start of the second reading on amendments to the Companies Act aimed at addressing and regulating the solvency process, said that the bill provided for the introduction of access to advisors and mediation for companies facing solvency.

A special comptroller will also be appointed to oversee each case of solvency, with a fund being set up to provide for the comptroller’s fees.

Nationalist MP Claudio Grech said that the interest of small business should also be taken into consideration, especially since these businesses, collectively, employed a considerable number of staff and provided an essential service to the economy.

Mario de Marco, for the opposition, agreed on the importance of safeguarding shareholders and creditors in cases of solvency.

“To mention but one case, the former shareholders of the Excelsior Hotel are still awaiting reimbursement, after the business folded in the 1970s following the bankruptcy of Bical Bank,” he said.

This was just one of many long-pending cases that needed to be addressed and that should serve as a reminder in the current debate of what had happened in the past, he said.

Chris Cardona, minister for the economy, said that the bill would hopefully help to diminish the stigma associated with solvency, since honest businesses and their owners who found themselves in difficulties, should not be denied a second chance.

The proposals, he said, would make it possible to save many small and medium business that find themselves “in the valley of death” while also safeguarding the interests of creditors.

“This is a bold bill that will ultimately invigorate companies and business, including small and medium enterprises,” Cardona said.