A court has upheld an urgent application by Keith Schembri’s lawyers for the appointment of an administrator to oversee his Kasco business empire after it was hit by a freezing order issued last month.

The decision was delivered by Mr Justice Lawrence Mintoff on Wednesday in ongoing constitutional proceedings filed by the former chief of staff, claiming that the freezing order issued by the Criminal Court, breached his fundamental rights.

The court said the purpose of the garnishee order was not to block the operation of a going concern but to ensure that its assets were preserved pending the outcome of any investigations. As long as the assets were “protected and preserved” without hindering the investigations in any way, it was in the best interests of all to ensure that businesses continued with their operations as smoothly as possible. 

The court agreed that Schembri's businesses had been “paralyzed” in a drastic and devastating manner by the freezing order, which was  a “draconian and disproportionate” tool, placing them in the impossibility of making bank deposits or paying creditors. Nor could they ensure adequate insurance cover, the timely arrival of imports and maintain the good quality of perishable goods.

This meant that within a few weeks, if not days, the businesses would have no option but to shut down and declare bankruptcy.

The court upheld the request for an interim relief measure, granting Schembri and the State Advocate two days within which to name a person or persons to carry out the function of administrator, under direction of the court and the Attorney General and in line with terms of reference agreed to by the parties.

Unless this was done, there was a real risk of the applicant’s businesses suffering serious and irreversible damage, which would lend a “mortal blow” and defeat the purpose of the freezing order itself, the court said.

The court also observed that the law ought to speak clearly, making such appointment of an administrator mandatory rather than optional, when a freezing order was issued in respect of an ongoing business concern.

Lawyers Edward Gatt and Mark Vassallo are assisting Schembri.