The Civil Court has turned down an application to put More Supermarket (Hamrun) under administration, saying there was no viable plan for the company's recovery.
The troubled supermarket in Hamrun was forced to close down earlier this month when its electricity supply was cut off because of pending bills. It also owes €250,000 in unpaid rent
An application for the company to be put under administration as filed on October 17.
The court was asked to appoint a controller to administer the business in terms of a company recovery procedure.
In its considerations, the court noted that the application was filed by the company and not its directors or creditors. The application lacked any extraordinary resolution by the company's general meeting. Such a document was considered vital in such proceedings in terms of the law.
One of the legal advisers to director Kurt Camilleri had declared in court that the company was already in a state of insolvency in the sense that it was not in a position to settle its debts.
The court said that in such proceedings, the company needed to satisfy the court that there were prospects for its recovery.
Although it had been said in court that a restructuring plan for the company existed, the court was then informed that there as nothing in writing.
The court quoted Prof Andrew Muscat who wrote in Principles of Maltese Company Law that “The primary aim of this far reaching procedure is to allow, if practicable,
companies in financial difficulty to recover rather than to be put them into liquidation.
The procedure is intended to be an alternative to the liquidation of a troubled business. It is not however intended to make effective insolvency or to merely postpone the inevitable crash”.
In order for a company to recover from situations such as this, it needed a fresh capital injection apart from a review of its direction, management and financial control. The shareholder had not poured more funds in the company and no investor would be prepared to invest a penny unless he was convinced that a viable business plan was in hand. Yet it had resulted that there was nothing in writing and the court seriously doubted that such a recovery plan actually existed.
Darren Casha, director of D. More Holdinings, the only shareholder, in contrast to the evidence by the directors, denied there was a plan. His declaration, while showing a conflict with the directors, showed, as the court had suspected that these proceedings would not lead to a recovery for the company. The court suspected that these proceedings were only aimed as putting off a total collapse.
The court therefore denied the request to put the company into administration saying there was no plan for the company to recover and its position was irreversible.