The Bulgarian Commercial Act recently introduced key changes to liquidation procedure. These updates are designed to make liquidation faster and more efficient while offering stronger protection to creditors. Here’s a breakdown of what’s new and why it matters.
Protecting Creditors During Liquidation
One of the most notable changes is a new rule that gives creditors more control when a company is in the process of liquidation. Under the updated Article 273, Paragraph 3, creditors can now ask the court to stop a company from being deleted from the Commercial Register if:
- They’ve filed a lawsuit against the company or its responsible individuals.
- They’ve applied for a payment order or have enforceable claims.
- Extrajudicial enforcement has started (where allowed by law).
The court will only lift the prohibition when the company provides proof that:
- The creditor’s claim has been dismissed or the legal proceedings are over.
- Payment orders have been canceled or rejected.
- The debt is settled, or enforcement is complete.
This is a big win for creditors, ensuring companies can’t dissolve to dodge obligations.
Faster Liquidation for Dormant Companies
The new Article 274a introduces a fast-track liquidation process for companies that meet certain conditions. This procedure is perfect for businesses that have been inactive for over a year and are ready to close quickly.
Who Qualifies for Fast-Track Liquidation?
To use the accelerated process, a company must meet these requirements:
- It hasn’t operated for at least 12 months.
- It doesn’t have employees or terminated all employment contracts over a year ago.
- It isn’t registered for VAT or canceled its VAT registration more than 12 months ago.
- It owes no debts to the state or municipalities.
- It’s not under audit or investigation by the National Revenue Agency (NRA).
- It’s not involved in lawsuits, enforcement actions, or special pledge proceedings.
How Does It Work?
- Step 1: A Decision to Liquidate
The shareholders’ meeting or partners must approve the fast-track process. For partnerships, unanimous agreement is required. - Step 2: Liquidator’s Declaration
Liquidators must submit a formal declaration confirming the company meets all eligibility requirements. - Step 3: Creditor Notification
Before distributing any assets, the company must publish a notice in the Commercial Register and wait three months for creditors to respond.
This streamlined process helps companies wrap up operations without unnecessary delays, provided they’re debt-free and have no unresolved legal issues.
What Does This Mean for Businesses and Creditors?
- For Companies:
If your business is dormant and meets the criteria, this new fast-track process saves time and resources. Just make sure all obligations are resolved beforehand. - For Creditors:
You now have stronger legal tools to prevent companies from avoiding debts by liquidating. Keep an eye on announcements in the Commercial Register to take timely action.
Why These Changes Matter
The updated rules reflect Bulgaria’s push for a more balanced approach to corporate dissolution. While fast-track liquidation makes life easier for inactive companies, new protections ensure creditors are not left behind.
