In the other case, Taylors Industrial Flooring Ltd v Malta & H Plant Hire (Manchester) Ltd court held that the proof by a creditor that his debts has not being paid is the prima facie evidence that the company is insolvent if the company gives no reason for not paying it.
In Malta the judgment concerning balance sheet test is Axel Johnson International AB vs. Aluminum Extrusions Ltd (28/05/2003). In this case the court:
- held considerable discretion and determined the dissolution and winding up of the company;
- summed up its role within this context as debts inquiring to the general situation of the company: either determines that the winding order should be issued, or that the company will be able to operate in the future and will be in position to pay its debts;
- took into consideration contingent and prospective liabilities when applying balance sheet test;
- declared the defendant company to be insolvent as its liabilities are far exceed its assets, and ordered the dissolution and winding up of the company on the basis of Article 214 (2) (a) (ii) inability to pay debts.
In conclusion, I would like to make it clear one more time. Cash flow tests deals only with debts that have already become due. Balance sheet test deals with future liabilities and future payments as well as available now assets. Balance sheet test take into consideration prospective and contingent liabilities.
- Company Act 1995, cap. 386 Laws of Malta.
- Gower, L.C.B. “Gowers Principles of Modern Company Law”. 6th ed. /by Paul L. Davies, Sweet and Maxwell, 1997.
- Leonard Sedgwick Sealy, David Milman “Annotated Guide to the 1986 Insolvency Legislation”, CCH Editions Limited, 1991 3rd ed.
- Michael Forde “The Law of Company Insolvency”, The Round Hall Press, Dublin, 1993.
- Prof. Goode “Principles of Corporate Insolvency Law”
- Pennington, Robert R. “Penningtons Corporate Insolvency Law”, Butterworth, 1991.
- UK law on line www.opsi.gov.uk
- UK legislation www.infolaw.co.uk/lawfinder
- Re Catholic Publishing and Bookselling Co Ltd (1864).
- Re Fitness Centre (South East) Ltd .
- Cornhill Insurance plc v Improvement Services Ltd .
- Re Capital Annuities Ltd .
- Byblos Bank SAL v Al-Khudhairy .
- Taylors Industrial Flooring Ltd v Malta & H Plant Hire (Manchester) Ltd .
- Axel Johnson International AB vs. Aluminum Extrusions Ltd (28/05/2003).