Plovdiv lawyer, company formation, contracts, property disputes

How to close a company in Bulgaria, bankruptcy

The company liquidation procedure starts with a formal decision taken by the owner of the company /in case of a single owner of the capital/ or the General Assembly Meeting about stopping business activity, termination of the company and appointment of a liquidator. A liquidator can be the current Managing Director or another person. The duties of the liquidator are similar to the duties of the managing director. He has the right to represent the company in regards to the termination of all contracts the company is a party of, collect and pay off debts, sell assets for the purpose monetarizing their value. The remaining financial assets after covering all debts will form the liquidation quotas.

The decision for liquidation must also include a time frame which can not be less than six months following the date of publishing an invitation to the creditors for the arrangement of any pending obligations. In case of appointing more than one liquidator, the liquidators represent the company jointly.

The National Revenue Agency must be notified about the termination of the company business activity. The National Revenue Agency may request certain documents or evidence of payment of tax, social insurance, fines. Within two months after receiving the notification, the National Revenue Agency issues a special type of certificate for acknowledging the company termination.

The certificate issued by the National Revenue Agency must be submitted in the Commercial register along with the decision for the company termination, a specimen of the signature, a statutory declaration and the consent of the liquidator for taking this position. After the application for liquidation is accepted, the company name in the Commercial Register will have the supplement- "in liquidation". An invitation to the creditors of the company may be submitted together with the application for liquidation or later.

After the assigned period of the liquidation has passed and there are no any claims from creditors of the company, the liquidator may prepare the closing balance of the company containing the liquidation quotas for the shareholders. The closing balance must be supported with a report including all the steps taken by the liquidator toward monetarizing assets, fulfilling obligations to the creditors, payments and collections of debts. The closing balance and the report of the liquidator must be accepted by the shareholders who also take a decision for the distribution of the liquidation quotas.

The liquidation period can be extended in case there are creditors of the company claiming payments of debts or fulfilment of other obligations. Throughout the liquidation process the company liquidator need to perform submission of all required reports, declarations, VAT filing, annual financial statements to the National Revenue Agency.

A company can enter the state "in bankruptcy" in case its available assets may not be sufficient for satisfying all creditors. The bankruptcy procedure is quite complex, involving the assignment a trustee by the District Court whose main task is to include all debts, monetarization of assets /including claims against company debtors/ in the bankruptcy case overseen by a District Court Judge.

The last stage of the company liquidation process is its deregistration from the Commercial Register as a result of which the company cease to exist.