Vessel and aircraft creditors’ rights ‘tightly protected’ under new insolvency rules, says Official Receiver

Malta’s new insolvency framework has special provisions for the shipping and aviation sectors that will ensure that creditor and mortgagees rights are “even more tightly protected,” according to Ingrid Hamilton, head of the Insolvency and Receivership Service within the Malta Business Registry.

Speaking to BusinessNow.mt, she shares that the importance of these two sectors to the local economy led to additional protections being extended to financiers and creditors in involved in the maritime and aviation fields.

The provisions are part of Malta’s new insolvency framework, which is currently past the mid-way point of a two-year transition period until December 2024, within which a number of new measures were introduced, including the introduction of insolvency practitioners.

Dr Hamilton explains that in other sectors, the application for a preventive restructuring procedure would bring about a stay of individual enforcement actions.

That means that a creditor’s legal action against an entity would be put on hold while the company’s restructuring process is underway.

However, when it comes to actions against ships or aircraft, or proceedings instituted by mortgagees or privileged creditors over ships, aircraft or aircraft engines, “the stay of individual enforcement actions is not applicable.”

The Official Receiver says that this specific inclusion “therefore ensures that when it comes to the maritime and aviation sectors, creditors have been given more safeguards and their rights are tightly protected, even in a scenario where the debtor company is undergoing preventive restructuring.”

Malta is a major registry of choice for the world’s ships, boasting the largest shipping registry in Europe and the world’s largest register for superyachts.

In recent years, it has also become an increasingly popular jurisdiction for the registration of aircraft.

For both sectors, financing can prove to be a byzantine affair, making the timely resolution of legal challenges a key consideration when choosing a jurisdiction to register the vessel or aircraft in, since that they will then be subject to that nation’s laws and courts.

The inclusion of special provisions for these two sectors in the context of a broader legislative restructuring is therefore of particular note, ensuring that Malta retains a competitive edge as a flag of choice for the world’s ships and aircraft even as it undertakes fundamental reforms in corporate legislation.