Bank revives company with the hope of receiving payment

The law provides that creditors of a company which had been struck off from the Companies Register may be revived to be able to pay a debt. This was held by Mr Justice Ian Spiteri Bailey in APS Bank plc -v- Ir-Registratur tal-Kumpaniji decided on 11 October 2021.

In its application the bank held that the Registrar of Companies in June 2020 issued a notice of a list of companies which were struck off in terms of Article 325 of the Companies Act. Troy Services Limited was one of these companies. This company owed the bank almost €300,000 and therefore, it is within the bank’s interest to revive the company and re-register it.

The Registrar of Companies replied in that the company failed to fulfil its obligations at law, by not registering its accounts since 2008. The Registrar wrote to the shareholder of the company, then published a notice in the newspapers, but there was no communication from the shareholder.

The Registrar pointed out that if the Court accepts that the company will be put back on the registry, the court will have no control on how it acts, The Registrar also pointed out that this may be a futile exercise since the company may not have any assets to pay its debts.

The Court pointed out that this action is based on Article 325(4) of the Companies Act. A representative of the bank told the Court that it never to action against the Troy Services Limited, since it had a number of payment arrangement, which were never honoured. This article of law states that any member of the company or a creditor or any other person who may have an interest may ask the court to order that the company be place back in the registry and the court may give those directions and orders that it may deem fit.

Mr Justice Spiteri Bailey pointed out that 5 years did not pass since the company was struck off and therefore, this action was admissible. From the evidence produced the bank is owed money from the company and this debt is still pending. The Court agreed that companies should not be revived if it does not have any assets to pay the debts, however, it held that the bank had in its favour hypothec that guaranteed payment. Although the Registrar was correct to strike the company off, however, the bank has an interest to have the company reinserted in the Registry.

The Court then moved to uphold the request and ordered that Troy Services Limited to be put back on the register for 5 years and therefore the bank should proceed with the claim and to enforce a judgement it may have.