When a company fails to honour a multi-million-euro debt judgement, Maltese insolvency law provides creditors with a powerful remedy—the winding-up of the debtor company itself. This was held in a judgement delivered on 16 March 2026, by Judge Ian Spiteri Bailey.
The case concerned a winding-up application filed by an Italian energy company against a Maltese company. The plaintiff company, which operates in the renewable energy and technology sector, claimed that the defendant company owed it a substantial debt. This was confirmed by an Italian court judgement delivered in March 2022 by the Tribunal of Rome, which ordered the defendant to pay approximately €1.3 million in damages, together with interest and legal costs.
Despite the judgement, the amount due remained unpaid and in an attempt to recover the debt, the creditor, initiated enforcement proceedings in Malta. A garnishee was filed against the defendant company in November 2022. This step was taken in reliance on Regulation (EU) No. 1215/2012 (Brussels I Recast), which allows judgements delivered in one Member State to be recognised and enforced in another Member State without the need for further recognition proceedings.
The garnishee order was served on the relevant sequestrators and was intended to attach any funds or assets belonging to the debtor company in their possession. Subsequently, the precautionary warrant was converted into an executive warrant, thereby transforming the measure from a protective mechanism into an enforceable instrument aimed at satisfying the creditor’s claim. Notwithstanding this escalation in enforcement measures, no deposits were made by the sequestrators and no part of the debt was settled. As a result, the amount due remained outstanding in its entirety for a period exceeding the statutory 24 weeks following the execution of the warrant, a circumstance which, under Maltese company law, may constitute evidence that a company is unable to pay its debts.
Additionally, the defendant had failed to file audited financial statements since 2019, raising concerns about its financial status. The plaintiff company therefore filed a winding up petition under the Companies Act.
The law stipulates that a company which cannot meet its financial obligations as they fall due should not continue operating to the detriment of its creditors. It also introduces a statutory presumption of insolvency where a debt remains wholly or partially unpaid for a period of 24 weeks following the execution of an executive title against the company—as was the case in this instant. The law also allows creditors, among other parties such as shareholders or directors, to seek the dissolution and liquidation of a company where the statutory grounds for winding-up are satisfied.
In this case, the applicant contended that these legal requirements had been fulfilled.
The court examined whether the defendant company could be deemed unable to pay its debts. It confirmed that the Italian judgement created a certain, liquid and due debt, a garnishee order was properly executed and later converted into an executive warrant and more than 24 weeks had passed without payment, satisfying the statutory requirement for insolvency.
The court also referred to prior Maltese jurisprudence and doctrine, which established that failure to pay an undisputed debt after enforcement can be sufficient evidence of insolvency.
The Civil Court (Commercial Section) held that the statutory requirements for insolvency had been satisfied and declared that the defendant company was unable to pay its debts. It ordered the dissolution and winding up of the company, effective from 13 March 2024.
The court appointed the Official Receiver as liquidator and ordered it to investigate the company’s financial position, take custody of its assets, verify debts and liabilities and report back to the court.
Finally, the court ordered the costs of the proceedings and liquidation be borne jointly by the parties in solidum.
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