Provisional administrator appointed in Price Club case

Mr Justice Tonio Mallia, sitting in the First Hall of the Civil Court, yesterday upheld an application filed by Andrew Borg Cardona, as liquidator of Price Club Operators Ltd, against Price Club Holdings Ltd.

The court was requested to order the liquidation of Price Club Holdings Ltd and to appoint a provisional administrator for the said company.

The liquidator of Price Club Operators Ltd also asked the court to appoint a liquidator for Price Club Holdings Ltd and to issue all orders and decrees that might be deemed necessary.

The court was further requested to hear and decide the case with urgency insofar as the appointment of a provisional administrator was concerned.

In yesterday's decree the court noted that the liquidator of Price Club Operators Ltd was requesting the liquidation of Price Club Holdings Ltd on the grounds that the latter company owed Price Club Operators Ltd almost Lm1,500,000.

According to Dr Borg Cardona, Price Club Holdings Ltd was not in a position to pay this sum or other debts it owed to other creditors and that therefore respondent company ought to be put into liquidation.

The liquidator also requested that a provisional administrator be appointed until such time as the liquidation process of Price Club Holdings Ltd was completed.

Respondent company had opposed the liquidator's request on the grounds that Price Club Operators Ltd had no legal interest in the case for it did not result that its alleged credit against Price Club Holdings Ltd was certain, liquid and due.

Price Club Holdings Ltd also pleaded that the appointment of a provisional administrator could serve no useful purpose at this stage of the proceedings.

Mr Justice Mallia decreed that the law provided that a request for the liquidation of a company could be made on the grounds that the company could not pay its debts. Such a request could be filed by any creditor of the company and the law did not specify that the amount claimed had to be certain, liquid and due.

The court did not agree that a judgment had to obtained showing that a debt was due before a company could be placed in liquidation for any delays in obtaining a judgment could be seriously prejudicial to the company's creditors.

Furthermore, the provisions of the Companies Act was based on a similar English law that provided that any person with pecuniary claims against a company could file for liquidation.

Thus, if the liquidator of Price Club Operators Ltd could show that he had a prima facie claim against Price Club Holdings Ltd and that in the circumstances the dismissal of his application would be to deprive him of a remedy then the application for liquidation had to proceed and be heard by the courts.

In this case, the court was of the opinion that, prima facie, Price Club Operators Ltd had proven it was a creditor of Price Club Holdings Ltd and that the former company had an interest in moving its application before the courts.

This did not mean that the courts were accepting that Price Club Operators Ltd was in fact a creditor of Price Club Holdings Ltd for this was an issue that had to be decided in the course of the proceedings.

Were it to result that Price Club Operators Ltd had no claim against Price Club Holdings Ltd, then the liquidation proceedings in respect of the latter company could not continue.

Mr Justice Mallia added that at this stage of the hearing he was of the opinion that Price Club Operators Ltd had a good arguable case that it was a creditor of respondent company and that the liquidation proceedings had to continue.

The court also concluded that the appointment of a provisional administrator was required in order to ensure that Price Club Holdings Ltd did not incur any further debts.

It concluded its decree by upholding Price Club Operators Ltd's request for the appointment of a provisional administrator of Price Club Holdings Ltd.

Joseph R. Aquilina was appointed to the post with the task of ensuring that Price Club Holdings Ltd did not aggravate its economic situation by incurring any further debts.

The administrator was also to safeguard the assets of respondent company and to take in hand the disposal of respondent company's immovable assets and of those companies in which respondent company had effective total control.

Such disposal of assets had to be effected at the best possible price and without prejudice to the interests of secured creditors.