Cap. 503 Art. 27AInsolvency proceedingsincase of aircraft companies.

(1) The memorandum and articles of a company, whose centre of main interests is in Malta or is registered in Malta and the sole asset of which is an aircraft or aircraft engines and other related assets (in this article referred to as an "aircraft company"), can specify that the right to request any insolvency proceedings in relation to the aircraft company shall be exercised only by the holders of a mortgage, an international interest or a security interest, or trustees or agents for such persons (in this article referred to as "preferred creditors"), over such assets, singly or collectively, including as a class or classes of creditors, to the exclusion of any other persons for as long as the interest of the persons so indicated remains in force.

(2) Where, in the case of an aircraft company, the aircraft is subject to a registered mortgage, an international interest, a security interest or other aircraft claims, having priority under article 25(1), and

(a) sub-article (1) applies; or

(b) the sums due to the relevant preferred creditor or creditors under such rights appear prima facie to exceed the value of the aircraft, the court shall, on the demand by application of the relevant preferred creditor or creditors as aforesaid:

(i) stay any insolvency proceedings which may have been instituted; and, or

(ii) desist from issuing any orders relating to insolvency proceedings, until the court is satisfied that there exist excess funds due to the aircraft company from any enforcement proceedings, in relation to which orders relating to insolvency proceedings, including a winding up order, may usefully be made.

(3) In the event contemplated in sub-article (2), the preferred creditor making a demand under the said sub-article shall, on making the demand and at such times and in the manner ordered by the court, be bound to provide the court with all information available to him relating to any enforcement proceedings he is involved in or is otherwise aware of, and in case paragraph (b) of sub-article (2) applies, information relating to the value of aircraft and the claim. In such case the court shall await the outcome of such enforcement proceedings, whether private or public as the case may be, after which it shall issue such orders as it considers appropriate in the circumstances, including the summary dismissal of any applications on the basis of the absence of any assets available to meet any claims other than those of the preferred creditors.

The court shall not address or reopen issues already resolved, agreed between the parties or determined by any court pursuant to the provisions of this Act, or a foreign court otherwise having jurisdiction, prior to such orders being made.

(4) Any person appointed by a court in Malta or overseas in any insolvency proceedings shall not in any way interfere with the exercise of remedies of the mortgagee, the holder of an international interest, security interest or other aircraft claims and, to the extent that he has any powers under applicable law, he shall exercise them in support of the remedies of such creditors under this Act. Should any aircraft come under his control prior to any creditor having a right to take possession of an aircraft and, or aircraft engine, in the exercise of his remedies, then such person must preserve the aircraft and, or aircraft engine and maintain it and its value in accordance with the agreements between the creditor and the debtor and hand over possession of the aircraft to the person entitled thereto under the provisions of this Act or any other applicable law.

(5) Should it result to the court that:

(a) there are no excess funds resulting from any enforcement proceedings; or

(b) ranking of creditor proceedings have taken place, in Malta or overseas, over the proceeds of sale of the aircraft, the result of which is final and binding on all reditors, and there are no excess funds; and

(c) there is no other business of the aircraft company which needs to be wound up, it shall not order the winding up of the aircraft company but shall instead declare the aircraft company dissolved and wound up for the above reasons.

The court shall order the aircraft company to be struck off the register without further procedures and this shall take place within three months from the filing with the Registrar of Companies of authenticated evidence of the enforcement proceedings, including the sale of the aircraft or the closure of ranking of creditors, which evidence together with a copy of any decrees of the court, shall be filed at the Registry of Companies for public notice. In such event, any residual rights of the aircraft company shall be vested in the shareholders of the company by operation of law.

(6) Should it result that there are excess funds due to the company after enforcement proceedings as aforesaid where the claims of preferred creditors are dealt with in a final manner, the court may order the winding up of the company in accordance with the applicable law and the commencement among creditors who are not preferred as aforesaid of the relative competing claims procedure under Sub-Title III of Title VIII of Part I of Book Second of the Code of Organization and Civil Procedure. A Maltese company who is or was in possession of an Air Operator’s Licence as issued by the Director General will be deemed to be a company whose main object or function is to own, hold, operate, charter, manage or lease any aircraft or aircraft engine and therefore the provisions of article 329B of the Companies Act shall automatically not apply to such company.

(7) Should the right to demand the winding up of the aircraft company not be vested under the memorandum and articles of the aircraft company in any of the persons referred to in sub-article (1), and any member of the aircraft company files such demand on the basis that there are grounds of sufficient gravity to warrant the dissolution and winding up of the aircraft company:

(a) the applicant shall, on making the demand and at such times and in the manner ordered by the court, be bound to provide the court with all information available to him relating to any aircraft claims over the aircraft and, or any enforcement proceedings involving the aircraft company or of which he is otherwise aware; and

(b) the court shall only issue such orders as will not hinder any enforcement proceedings by the said creditors under the provisions of this Act, unless otherwise agreed between all parties; and

(c) if a preferred creditor provides evidence that sub-article (2)(b) applies, the court shall act in accordance with sub-article (2).

(8) In this article: "company" shall include any legal organisation of any form, whether constituted under the laws of Malta or of another state and shall include also a trust being administered by a trustee holding relevant assets;

"enforcement proceedings" shall include actions by any mortgagee, the holder of an international interest, a security interest and, or aircraft claimants, whether in Malta or overseas, under article 33, 33A, 33B and 33C of this Act or any judicial sale proceedings under applicable law; "insolvency proceedings" means bankruptcy, liquidation, administration, winding up, company reconstruction or other collective judicial or administrative proceedings, including interim proceedings, in which the assets and affairs of the debtor are subject to control or supervision by a court, a liquidator, an administrator or an insolvency practitioner for the purposes of reorganisation or liquidation;

"related assets" shall include any proceeds of sale or insurance or requisition compensation, and all property referred to in article 25(2).

(9) For the avoidance of doubt, the provisions of the Companies Act relating to insolvency shall not apply insofar as inconsistent with this article, the provisions of this Act and in particular with the First Schedule of this Act.

(10) Nothing in this article shall restrict or prejudice the right of any creditor to submit its claim to the court, in order to ensure that the claim is considered by the court at the appropriate time, paying regard to the provisions of this article.