The liquidator, not the court, picks the best bidder

The Civil Court (Commercial Section) held on 12 August 2026 that choosing the best offer for a company's property in a winding up by the court is a power of the liquidator, not of the court. Mr Justice Ian Spiteri Bailey declined to pick a buyer from four bidders when the Official Receiver asked the court to do so.

He ordered the Official Receiver to decide and then to bring that decision before the court for control under article 238(3) of the Companies Act (Chapter 386 of the Laws of Malta).

The facts

The decree was given in chambers in Hsbc Bank Malta P.L.C. (C3177) vs The Golden Shepherd Group Limited (C-14948). The Golden Shepherd Group Limited is being wound up by order of the court, with the Official Receiver as liquidator. By a decree of 4 May 2026, Cast Renting Limited had been authorised to take over the proceedings in place of the bank.

The Official Receiver held a call for offers for immovable property of the company and received four offers. On 23 July 2026 the Official Receiver filed notes giving the details of the bidders. The notes asked the court to evaluate and decide who had made the best offer on the best conditions, and who had the capacity to buy the property.

What the court held

The court began with article 238 of the Companies Act. Under article 238(2)(a), in a winding up by the court the liquidator has the power "li jbiegħ beni mobbli u immobbli, magħdud kull jedd, tal-kumpanija b'irkant pubbliku jew bi ftehim privat" (to sell the movable and immovable property of the company, including every right, by public auction or by private agreement).

Article 238(3) makes the exercise of those powers subject to the control of the court, and allows any creditor or contributory to apply to the court about a proposed exercise of them.

The court held that the power to sell belongs to the liquidator, noting that the English text says the liquidator "shall have the power". The court has control only over how that power is exercised. Deciding who made the best offer, and with whom the sale contract is to be signed, is therefore a decision for the liquidator, in this case the Official Receiver.

The court described that power as exclusive to the liquidator and held that "dik is-setgħa mhix sostitwibbli imma hija biss soġġetta għal kontroll tal-Qorti" (that power cannot be substituted, but is only subject to the control of the court).

The court read the request as one that would replace the liquidator's power with a decision of the court, rather than subject that power to control. That, it held, would not conform with what the law requires in a winding up by order of the court. It added that the process must be transparent and, above all, fair to the creditors and all interested parties, and that conducting the winding up as the law provides is important for that reason.

The court therefore abstained from ruling on the request. It thanked the Official Receiver's office for its extensive work on the call for offers and their evaluation. It ordered the Official Receiver to decide which of the four bidders made the best offer and with whom to contract.

It then ordered that an application be filed under article 238(3), so that the court could evaluate and control that decision. The documents filed with the notes remain in the record.

Why it matters

A liquidator in a winding up by the court should take the decision on a sale and then apply for the court's control, rather than ask the court to choose. Creditors and contributories who object to a sale have their remedy under article 238(3) once the liquidator has decided. Bidders should expect the choice to come from the liquidator, with the court reviewing it.

Where it sits

A company may be wound up voluntarily or by the court. In a winding up by the court, the liquidator takes charge of the company's affairs, realises its assets and pays its creditors. Article 238(2) lists the liquidator's particular powers: to sell the company's property, to act and sign documents in its name, to raise money on the security of its assets and to appoint a mandatary, that is a person who acts for the liquidator for particular purposes.

The court's role in this scheme is supervisory. It controls the exercise of those powers, including on an application by a creditor or contributory, but it does not exercise them itself. The decree applies that division to the sale of immovable property and to the choice between competing bidders.

The judgment names no earlier case. The court decided on article 238 alone.

Source

Civil Court (Commercial Section), Hsbc Bank Malta P.L.C. (C3177) vs The Golden Shepherd Group Limited (C-14948), 12 August 2026: 6/2018