27.09.2024

FINAL: THE COMMERCIAL LAW WAS CHANGED - RAPID LIQUIDATION OF COMPANIES UNDER SIX CONDITIONS

Traders who meet six conditions will be able to conduct quick liquidation proceedings, without the multiple applications to different authorities, and creditors will be satisfied in shorter terms. This follows from the changes to the Commercial Law finally adopted by the National Assembly.

Voluntary liquidation of a business currently takes nearly a year, and the procedure is lengthy and expensive. There are also hundreds of cases in which liquidation takes 4-5 years. The conduct of the proceedings requires the submission of several consecutive applications for entry of various circumstances and announcement of acts in the commercial register - for entry of termination of activity and liquidation, invitation to creditors, for deletion after completion of liquidation. In addition, a notification is also submitted to the National Revenue Agency for the upcoming liquidation proceedings, as well as to the National Insurance Institute for the transmission of payrolls, which end with certificates.

Therefore, in the Recovery and Resilience Plan, it was envisaged in the Trade Act to provide for fast-track liquidation proceedings, the adoption of which was delayed due to the frequent change of parliaments.

Deputies accepted in the second reading the amendments to the Commercial Law, which provide that in order to benefit from a faster liquidation, the trader should meet six conditions. They are the company to:

1. did not carry out any activity or stopped the activity carried out more than 12 months ago;
2. did not hire workers or employees or terminated employment with them more than 12 months ago;
3. was not registered under the Value Added Tax Act or terminated its registration more than 12 months ago;
4. there are no outstanding debts to the state and municipalities;
5. there are no pending proceedings to establish tax obligations and obligations for mandatory insurance contributions, to which the National Revenue Agency is a party;
6. is not a defendant in court proceedings, a debtor in enforcement or order proceedings, or enforcement has not been initiated against him in accordance with the Law on Special Pledges or the Law on Financial Security Contracts.

The existence of these circumstances is certified by a declaration that the liquidators submit when submitting an application for termination of activity and liquidation.

Quick liquidation proceedings are conducted when the company is terminated by decision of the general meeting and/or consent of the partners. "For this, a decision to conduct quick proceedings is also necessary, which is taken by the general meeting of the limited liability company, the joint-stock company and the company with variable capital, and for the other commercial companies - unanimously by the unlimited partners", the deputies wrote in a new Art. 274a in the Commercial Law.

In the case of quick liquidation, a shorter term is provided for satisfying the creditors - the company's property is distributed if three and not six months have passed since the day on which the invitation to the creditors was announced in the commercial register.

When it receives an application for quick liquidation, the Registration Agency will send a notification electronically to the National Revenue Agency. Within 30 days of its receipt, the National Revenue Agency will electronically provide the agency with the information it has on whether the six conditions for quick liquidation are met.

When submitting an application for termination of activity and quick liquidation, the company, again through the Registration Agency, will submit an application for the issuance of a certificate for handing over the payroll. And she will inform the National Insurance Institute immediately and ex officio. The relevant Territorial division of the institute will issue a certificate for handing over the payrolls within 30 days from the entry of the termination of the commercial activity and the opening of quick liquidation proceedings, provided that the company has no outstanding obligations. The certificate will be sent electronically to him and to the Registration Agency.

In addition to the changes governing the rapid liquidation proceedings, the deputies also adopted amendments to the Commercial Law on cross-border conversions. With the new regulations after Art. 265 of the Commercial Law already has provisions in all letters of the alphabet, i.e. there is already art. 265ya.

All changes to the Commercial Law were adopted without votes against. The key question raised for discussion was when these changes, which in addition to ending two criminal proceedings against Bulgaria, are also in favor of business, will actually start to operate and become a "living" law.

At the end, a year was given in the Commercial Law to ensure the technical possibility to implement the new possibilities for quick liquidation and cross-border conversions. It was foreseen that the Minister of Justice would ascertain the existence of this technical possibility with changes to Ordinance No. 1 on keeping, storing and accessing the commercial register and the register of non-profit legal entities, so that they would be promulgated in the "State Gazette" and so that they become known to businesses that will take advantage of them.