Bus company Arriva can only pull out of its 10-year public transport contract with the Government’s consent or if it files for liquidation, Times of Malta has learnt. Speculation has been growing that the company, a subsidiary of German transport giant Deutsche Bahn, might wind down its operation as a result of financial losses it has sustained since the start of the service in July 2011.
It is unclear whether the possibility of liquidation has cropped up in talks the company is having with the Government over changes to the bus routes.
It would be the messiest option
Legal experts who spoke to this newspaper on condition of anonymity noted that liquidation would be the “messiest” option for the Government because the operation would stop immediately and company assets would be frozen.
“Assets will be managed by a liquidator who will be vested with the authority to decide in the best interest of the company, within the parameters of its plans to close down,” the experts said, adding that any contestations from creditors would have to be decided by the court.
They added that, if the public transport service contract was signed with a company registered in Malta, creditors would have no right to seek compensation from the mother company even if it was a shareholder.
Move would damage reputation
But the experts also noted that liquidation could further damage Arriva’s reputation that has suffered as a result of its bumpy ride in Malta.
In one of its very few public utterances, Arriva was yesterday quoted by The Sunday Times of Malta saying that it was expecting “a positive outcome” from talks with the Government over extensive changes to the bus routes.
However, the two sides remain poles apart on the price tag of the changes requested by Transport Malta.
Discussions are further complicated by the continued ban on the use of bendy buses pending safety certification.
Liquidation would land the Government with a massive logistical problem to keep the public transport service running until a long-term solution is found.
When interviewed on Dissett two weeks ago, Transport Minister Joe Mizzi insisted the Government had a “plan B” if Arriva stopped operating. He did not say what the alternative was.
If the contract is terminated by mutual consent, Arriva will have to continue operations throughout the handover period that may last a few months, giving the Government a breather to find a long-term solution.
Sources said the Government could nationalise the service – which was allowed by EU rules but not considered feasible given the added strain this would put on public finances – or issue another tender for a 10-year contract.
A new operator will most probably purchase the buses and infrastructure from Arriva and take on the drivers to ensure a smoother transition, something that will be impossible if the company files for liquidation.