Should Malta file a claim in Steward's US bankruptcy proceedings?

If the Maltese Government does not file proof of a claim in a United States court on or before November 4, it stands no chance of getting Malta’s money back through bankruptcy proceedings initiated by Steward.

On May 6, 2024, Steward Health Care System LLC and its debtor affiliates filed voluntary petitions for relief in the US Bankruptcy Court for the Southern District of Texas. The deadline for governmental units to file claims within the bankruptcy proceedings expires on November 4, 2024 at midnight Malta time.

Under the US Bankruptcy Code, the word “claim” includes a right to payment, whether or not the right is reduced to judgement, liquidated, unliquidated, disputed, undisputed, legal, or equitable.

Malta’s National Audit Office reported that, between June 2016 and end 2021 the Government of Malta paid the hospitals concessionaire a total of €456.08 million. Excluding the salaries for personnel the Government made available to the concessionaire, the net amount the Government paid the concessionaire in the same period is €267.57 million.

Malta’s court found that the concession was tainted by fraud at all stages and declared the concession contract null and void, a decision confirmed on appeal. This means that the Republic of Malta suffered a net loss of €267.57 million at the hands of the concessionaires, who therefore obtained a publicly-funded financial benefit without just cause.

The Prime Minister, Robert Abela, said in July, “Every amount that did not go towards health services will be demanded back.”

Only if the Government of Malta files a proof of claim form in the US bankruptcy proceedings, would it stand a chance of clawing back some or all of the funds paid out to the concessionaires through those same bankruptcy proceedings.

Ownership of Steward’s Malta companies was indirectly held by Steward Health Care System LLC and Steward Health Care International LLC, both listed debtors in the US bankruptcy proceedings, up until 2020. While the corporate structure of the Malta companies is currently removed from those named debtors, lifting the corporate veil will likely show that both the Maltese and US corporate structures are still ultimately controlled by Ralph de la Torre.