Liquidation of Bulgarian company
Liquidation of Bulgarian company is the process of closing down a company (also known as dissolution of a company) and the distribution of its assets to creditors, and if possible, to the shareholders. It’s a strictly legal procedure that requires the expertise of a lawyer and needs to be entered in the Trade Registry in order come into force.
The process usually begins by a decision taken by the shareholders to dissolve the company (to close the company down). Although Articles 154 and 252 of the Commercial Law list other means, as well.
The Process of Liquidation of Bulgarian company
The first step before the liquidation of the company is the said dissolution. No company can be liquidated before it is dissolved. The decision may be taken by the shareholders who have at least ¾ of the capital.
After the dissolution the appointed liquidator invites all the known creditors by written notice. The notice is also published in the Bulgarian Trade Register. This is done in order for the creditors to state their claims legally.
While in liquidation, no company can have commercial activity except for the purposes of the liquidation itself. Although during the process the legal entity is not lost, after the process is over, the company is erased from the Trade Register and the legal entity ceases to exist.
The most important phase during the liquidation is the conversion of all assets into money and the settlement of claims and debts between the company and any other third parties. The assets are divided among the creditors in order specifically set in the law.
If anything is left after the debts have been paid the shareholders divide the rest usually according to their shares.
Appointment of Liquidator
A liquidation can’t go through if there is no appointed liquidator. They are usually the former manager of the company and they are responsible for the representation of the company and the completion of the procedure. A liquidator has the following responsibilities:
- to terminate the pending deals;
- to collect debts;
- to transform assets into cash;
- to pay the creditors’ claims;
- to draw up a balance sheet;
- to close the company’s accounts.
The liquidation may be temporarily stopped if a process of insolvency is brought before a court by the liquidator, a creditor, the National Revenue Agency or others mentioned in Article 625 of the Commercial Law. If the court declares insolvency by a decision the liquidation is permanently terminated.
Ending of the Liquidation
It’s a long process and it may end after six months, a year or even more. After all the liabilities are settled and all the assets are distributed, the liquidator takes the necessary steps to delete the company from the Trade Register.
If you’re a foreign shareholder in a company in Bulgaria or a creditor asking for their claims to be respected you can contact the lawyers at our law firm for more information to protect your rights and interests.
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This article is written by Avgustin Zdravkov.