Court establishes Price Club creditors' ranking
A court today determined the order in which creditors of a former director of Price Club Operators Limited and Biochemicals Limited were to rank in preference.
HSBC Bank Malta plc had told the court that it had deposited 1,001,630.57 euros in court following the judicial sale by auction of property belonging to Mr Zammit. The Commissioners of Value Added Tax and of Inland Revenue, together with the Registrar of Court objected to the withdrawal of these funds by HSBC on the basis that they too had claims against Mr and Mrs Zammit.
The court was, therefore, requested to establish the order in which the various creditors would rank in this case.
The court heard that HSBC was owed 3,316,812.84 euros from Victor Zammit in his capacity as guarantor of Biochemicals Limited. The Commissioner of VAT declared that the department was owed 684,022.19 euros by Mr Zammit while the Commissioner of Inland Revenue claimed that his department was owed 931,162.35 euros. The Registrar of Court also claimed payment of 445.28 euros being the court expenses for the judicial sale by auction.
After examining the case law governing ranking of creditors Mr Justice Lino Farrugia Sacco ruled that the first preference creditor was the Court Registrar.
This official was followed in order of preference by the Commissioner of VAT and by the director of Social Security.
As the amount deposited in court had been exhausted the court ruled that it would not establish any further ranking of creditors.
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Adrian Sciberras
Nov 20th 2009, 23:49
@J Busuttil...
a good business plan would suffice to start, and as the business grows, sometimes the bank is put in a corner, let me explain..
The business grows, but is undercapitalized... the business is good but not making enough profits... the bank believes that the company will turn profitable... so it will lend more money to the business....
the business grows and is better capitalized, but to expand further, it needs more capital, the bank is enticed by the business prospects, and so they lend even more...
the business becomes too big, too hot to handle, problems start surfacing (e.g. non-payment of priviledged creditors), and from that you will know a business is not healthy...
the bank, has an unsurmountable debt to collect (e.g. 10x the original loans granted), so they are forced to lend even more to give a lifeline to the business, otherwise they risk not being paid anything...
in the end, the business goes bust, and no one takes anything...
this is how a business fails... the bank is the culprit, because it allowed its expansion, but in the end, it will suffer most...
Joe Busuttil
Nov 20th 2009, 20:54
Adrian Sciberras,that's a good idea and I guess everybody has thought about it sometime or other. The difference is that some people are insensitive to others and have guts. Others do not bring themselves to trick others and have a sense of responsibility and are gentlemen.Anyway,how do these people manage to get so much money from a well established bank such as HSBC?
joe busuttil
Nov 20th 2009, 20:43
Good idea Adrian Sciberras. If I were 35 years younger I would have tried it.
GiovDeMartino
Nov 20th 2009, 19:57
It is not my fault that I did not pay my taxes in full. I have always been on a fixed salary and it was the dept. to decide what I should and what I should not pay. In fact there was a time when I wrote to the Commissioner and requested them to kindly INCREASE the rate of paye. But it was of no avail! I wanted to pay MORE not LESS.
fbonello
Nov 20th 2009, 18:52
@ Norman Chetcuti That was a good one....you made me laugh. I wonder how Mr Demartino did not say the amount due by his goodself is prescribed !!!!!!
Adrian Sciberras
Nov 20th 2009, 18:47
nice, so the idea is this.... open up a business, take as many loans as you can, default in priviledged creditors as much as you can until they start sending court notices, use a property which you cannot sell as a collateral.... collect the turnover in cash, leave debts unpaid, declare yourself bankrupt and cash out. In the example below for this and other companies, with all the amounts owed, one can undoubtedly become a millionaire from a failed business.
MSciberras
Nov 20th 2009, 18:03
This seems to imply that there are not enough funds to cover the unpaid NI contributions of employees - so what happens there? Will the employees in question be affected when they come to claim their pensions? Apart from the fact that nowhere is it mentioned if the interest on these amounts is included. It is a disgrace that gov for years has allowed companies to run up huge arrears on NI contributions in the name of extending 'credit' to an economy that always seems starved of cash, even in the good times. Of course, when the companies crash, the NI contributions remains unpaid, and no-one goes to jail, no director is interdicted or barred from holding any future directorships when NI contributions are used for cheap working capital. A shame and a disgrace.
D Delia
Nov 20th 2009, 17:59
"..............ruled that the first preference creditor was the Court Registrar". Heqq, charity begins at home......
Norman Chetcuti
Nov 20th 2009, 17:55
@ Giov Demartino You should be ashamed of yourself not paying your taxes in full. It's your government after all!
GiovDeMartino
Nov 20th 2009, 17:29
The Com. of Inl. Rev informed me that I owe the dept. THREE EUROS which go back some 8 years. I'm not that bad, after all.