New rules for fast-track liquidation in Bulgaria
Statutory amendments, which introduced new rules regulating a fast-track voluntary liquidation procedure for companies in Bulgaria, were promulgated in State Gazette on 27 September 2024.
Shorter terms and the “one-stop shop” principle applied
In the case of fast-track liquidation, the term for distribution of the company’s property shall be 3 months as from the day of announcement of the invitation to the creditors with the commercial register – a shorter term compared to the term of 6 months upon the standard liquidation procedure (more information about it can be found here).
In addition to the shorter term for completion of the liquidation, other reliefs for businesses are provided for in the fast-track liquidation proceedings, related to the elimination of the need to submit separate applications to several state authorities. It is sufficient for the company with discontinued activity to submit the necessary documents only to the commercial register at the Registry Agency, and the other state authorities shall be notified ex officio as follows:
- The notification to the National Revenue Agency (NRA) for termination of the company's activity shall be submitted ex officio and electronically by the Registry Agency after an application for termination of activity and liquidation under the fast-track procedure has been received in the commercial register. Within 30 days as of receipt of the notification, the NRA shall provide electronically to the Registry Agency the information that is available to the NRA on the presence or absence of the conditions (listed below) for conducting a fast-track liquidation. The registration officials at the Registry Agency shall decide on the applications for registration of termination of activity and fast-track liquidation after they receive information from the NRA on the presence or absence of these conditions.
- The company shall submit, via the Registry Agency, an application to the National Social Security Institute (NSSI) for the transfer of labor documentation for employees with terminated employment relationships, including pay slips. The relevant territorial department of the NSSI shall issue a certificate for handing over the labor documentation within 30 days as from the registration of the termination of commercial activity, provided that the company has no outstanding obligations. The certificate shall be sent electronically to the company and to the Registry Agency.
Under what conditions the fast-track liquidation may be carried out?
Fast-track liquidation may be carried out if a resolution for the conduction of voluntary liquidation of this type has been adopted by the general meeting of the limited liability company, the joint-stock company or the variable capital company, and for the other commercial companies - unanimously by the unlimited partners.
However, not every company can benefit from the easier procedure. It can only be applied if the company:
1. has not carried out any activity or has terminated its activity more than 12 months ago;
2. has not hired any employees or has terminated its employment relationships more than 12 months ago;
3. has not been registered under the Value Added Tax Act or has terminated its registration more than 12 months ago;
4. has no outstanding obligations towards the state and municipalities;
5. has no pending proceedings for establishment of tax obligations and obligations for mandatory social security contributions, to which the National Revenue Agency is a party;
6. is not a defendant in court litigation, a debtor in enforcement or order proceedings, or no enforcement has been initiated against it under the Special Pledges Act or the Financial Collateral Agreements Act.
The company must meet all six conditions specified above cumulatively. The liquidator shall submit a declaration for the presence of the said prerequisites when submitting the application for termination of activity and liquidation. The circumstances from item 1 to item 5 inclusive shall be verified ex officio by the NRA and the confirmation by the NRA for their presence shall be mandatory for the registration of liquidation under the fast-track procedure in the commercial register.
When does the fast-track procedure start to apply?
It is envisaged that the Registry Agency shall ensure the technical possibility to implement the fast-track liquidation procedure together with the NRA and the NSSI within one year from the entry into force of the new rules (i.e. until the end of September 2025), and the starting date of its implementation shall be determined by the minister of justice by amending Ordinance No. 1 dated 14.02.2007 on keeping, storing and accessing the commercial register and the register of non-profit legal entities.
This article has been prepared for the purposes of general information only and does not constitute legal advice with respect to any particular subject or situation. For specific legal advice, you should contact an attorney-at-law. Stoeva, Tchompalov & Znepolski is not responsible for any legal action undertaken on the basis of the information contained herein.