Enemalta objects to court order that it provide 'free electricity' to non-paying customer

Local electricity supplier Enemalta has asked a court to revoke a decree preventing it from disconnecting a non-paying customer, arguing that it was effectively being ordered to provide its services for free.

All Seasons Company Ltd, which operates the Xlendi Hotel in Gozo, is currently the subject of a recovery order, after it filed for protection under the commercial code. Company recovery proceedings are a legal safeguard for companies that are encountering financial difficulty and is intended to protect the company until it is back in good financial health. These measures include the staying of any application for the winding up and/or dissolution of the company and the execution of debts against the company.

Enemalta is one of several of the hotel's creditors and the hotel is understood to be several months in arrears with its payments. But after ARMS Ltd sent its technicians in to disconnect the supply at 09:30am on Saturday, the hotel filed an urgent application in which it said that despite having 25 of its rooms occupied, with more occupants expected over the weekend, the company was still not in a position to start making repayments.

The attempts to disconnect it from the grid went against the spirit of the recovery procedure and stultified it, argued the hotel, decrying Enemalta's “arbitrary actions,” adding that the supply had to be reconnected for the sake of the present occupants, the image of the hotel and for Malta's image abroad. The court upheld the request in a decree it issued later that day.

By means of an application filed by lawyer Stefano Filletti in the Gozo courts this morning, Enemalta pointed out that the disconnection had not been made in an attempt to recover the company's prodigious arrears, but rather because the electricity supplier was not being paid for the current consumption.

Enemalta pointed to the fact that All Seasons Company Limited is in dire financial straits, saying that its own directors had admitted to this. The fact that the company had failed to pay and to date was still failing to pay for its current consumption of electricity led the utilities provider to take the decision of withdrawing its service.

It stressed that the drastic action was not aimed at exercising its claim for the unpaid bills, but only to safeguard the sum it was owed from getting even larger and less likely to be paid.

The effect of the court order to reconnect the service meant that Enemalta was now being forced to provide electricity for free, Filletti argued in the court application, adding that Saturday's decree had caused an unfair burden on it as a private company.

The articles of the law dealing with the Company Recovery Procedure gave the court a wide-ranging power to prevent creditors from collecting debts, but they do not permit it to force service providers to supply a service to a company in recover, for free.

“If All Seasons Company Limited has reached the extreme of being unable to pay for services that it is using, then the company is legally bankrupt and should not be misusing the protection offered by the Company Recovery Procedure to prejudice third parties,” Enemalta argued, requesting the court to revoke its previous decree.