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PART FOUR BANKRUPTCY (New SG 63/1994)
CHAPTER THIRTY EIGHT GENERAL PROVISIONS (Former Chapter 34 SG 83/1996)
Section I General Provisions Objective of Proceedings Article 607 (1) Bankruptcy proceedings shall be aimed at providing fair satisfaction of creditors and opportunities for reorganisation of debtor's enterprise. (2) Bankruptcy proceedings shall take into
consideration the interests of the creditors, the debtor and his employees.
Grounds for Institution of
Bankruptcy Proceedings Article 607a (New SG 70/1998) (1) Bankruptcy proceedings shall
be instituted for merchants who are insolvent. (2) Besides insolvency the
bankruptcy proceedings shall be instituted due to overindeptedness of a
limited liability company, joint stock company and public limited partnership.
Insolvency Article 608 (1) (Repealed, Former Paragraph 2,
Amended SG 70/1998, SG 84/2000) Insolvent shall be deemed merchants who are
unable to perform due and established on grounds money obligation at the
moment of phases of considering the request for opening the bankruptcy
proceedings the under a commercial transaction or public obligation to the
state and municipalities related to their commercial activity. (2) (Former Paragraph 3, Amended SG 70/1998) Insolvency shall be presumed where the debtor has discontinued the payments.
Concealed Partnership Article 609 Bankruptcy proceedings shall be instituted also for persons who conceal commercial activity through insolvent debtors. Instituting Bankruptcy
Proceedings for Partner with Unlimited Liability Article 610 (Amended SG 70/1998) Concurrently with instituting bankruptcy proceedings for commercial company, bankruptcy proceedings shall be considered open, also for unlimited liability partner therein. Instituting Bankruptcy
Proceedings for Deceased or Erased Article 611 (1) (Amended SG 70/1998)
Bankruptcy proceedings shall also be instituted for deceased or erased from
the commercial register sole proprietor provided prior to the death or erosion
he has been insolvent. (2) (New SG 70/1998) Bankruptcy
proceedings shall also be instituted for deceased or erased from the
commercial register unlimited liability partner. (3) (Former Paragraph 2 SG
70/1998) Bankruptcy proceedings shall also be instituted for insolvent
companies in liquidation. (4) (Former Paragraph 3, Amended SG 70/1998) For cases such as under paragraphs 1 and 2 the request to institute bankruptcy proceedings may be submitted within one year following the death, the erosion from the commercial register, respectively. Inapplicability of
Bankruptcy Article 612 (1) (Amended SG 70/1998, SG 84/2000) No bankruptcy proceedings shall be instituted for public enterprise merchants exercising a state monopoly or established by a special law. (2) (Amended SG 70/1998) The bankruptcy proceedings for banks and insurers shall be performed under terms and procedures, settled by a separate act. The provisions of this section shall apply to the extent that the separate act does not provide otherwise. (3) (New SG 70/1998) The regulations on the insolvency of merchants - public enterprises exercising a state monopoly or established by a special law shall be settled by a separate act. Court of Jurisdiction Article 613 The court of jurisdiction over
bankruptcy shall be the district courts where the seat of the merchant is
located.
Appeal against the Rulings
and Decisions of the District Court Article 613a (New SG 70/1998, amended No
64/1999) (1) The rulings and orders enacted
by the district court under the bankruptcy proceedings shall be appealed
before the appropriate Appellate Court under terms and conditions of articles
196 – 211 and 213 – 218 of the Code of Civil Procedure. (2) The Appellate Court of shall
institute the proceedings on the day of submission of the appeal or at the
latest on the next working day and shall enact its order within 14 days from
the day of the final hearing. Cassation Appeal Article 613b (New SG 84/2000) (1) Subject to appeal before the Supreme Cassation Court shall be: 1. the decisions of the appeal courts; 2. the definitions which overruled private complaints against definitions that obstruct the further movement of the proceedings; 3. the definitions of the appeal courts for termination of the second – instance proceedings. (2) The Supreme Court of Cassation shall open the case on the day of the receiving the complaint or not later than the next day and shall consider it in one month period from the opening the case.
Bankruptcy Estate Article 614 (1) The bankruptcy estate shall
comprise: 1. property rights of the debtor
as of the date of the ruling to institute bankruptcy proceedings; 2. property rights of the debtor
acquired after the date of ruling to institute bankruptcy proceedings. (2) (Amended SG 70/1998) The
property of the sole proprietor shall also include: 1. chattels, rights on chattels and money deposits that are joint matrimonial property, included in the enterprise thereof; 2. one half of the chattels, rights on chattels
and money deposits that are joint matrimonial property, not included in the
enterprise thereof. (3) (New SG 70/1998) The estate of
the unlimited liability partner shall also comprise one half of the chattels,
rights on chattels and money deposits that are joint matrimonial property. (4) (Former Paragraph 3, Amended SG 70/1998) Debtor’s and unlimited liability partner’s properties not subject to forfeit shall not be included in the bankruptcy estate. Nullity of Termination of
Joint Matrimonial Property Article 615 (Amended SG 70/1998) Termination or partition of joint matrimonial property, as well as settlement for a larger share, shall be null and void in respect to the bankruptcy estate, should they have been effected within six months prior to the initial date of the insolvency, till the termination of bankruptcy proceedings. Bankruptcy Creditors Article 616 (1) The bankruptcy estate shall be
used to satisfy all creditors of the debtor for commercial and non-commercial
receivables that have occurred prior to the date of ruling on declaration of
bankruptcy. (2) Receivables ensuing from: 1. interest determined by
operation of law or by the contract on unsecured receivables, due after the
date of ruling to institute bankruptcy proceedings; 2. credits extended to the debtor
by partners; 3. gratuitous transaction. (3) Foreign creditors shall have equal rights with domestic creditors in bankruptcy proceedings. Due Obligations Article 617 (1) All obligations of the debtor
in cash or in kind shall be considered due as from the date of ruling for
declaration of bankruptcy. (2) (Amended SG 84/2000) Obligations in kind shall be transformed into obligations in cash at the respective market value as of the date of the opening the bankruptcy proceedings. Retention of Securities Article 618 (1) In the course of bankruptcy
proceedings creditors shall retain their rights on securities provided. (2) (Repealed SG 70/1998) Summons Article 619 (1) (Amended SG 84/2000)In the
bankruptcy proceedings the debtor shall be summoned at its registered seat,
and the creditors – parties in the case - at the addresses which they have
pointed out in the country. Where they have changed address without fulfilling
their obligation to enter such circumstances in the register, all summonses
and papers shall be attached to the case file and considered duly delivered. (2) Creditors with registered
address abroad and without address in this country shall be summoned at the
address known abroad, should the address be unknown summons shall be issued to
such creditor once by means of the State Gazette. (New SG 84/2000) After the opening of the bankruptcy proceedings the creditors shall be considered informed about acts that do not require promulgation in the State Gazette or notification under the terms of the Civil Code and which are not subject to appeal, with the entry of notification for the respective act in the book under Art. 634c, Par. 1.
Fees and Expenses Article 620 (1) (Amended SG 70/1998) No
preliminary state fees shall be collected on the application to institute
bankruptcy proceedings, submitted by the debtor. Such fees shall be collected
from the bankruptcy estate by distribution of the assets. (2) (New SG 70/1998, Supplemented SG 84/2000) In case the appeal for opening the bankruptcy proceedings The state fee shall be collected from the creditor, provided the application to institute bankruptcy proceedings is submitted by him or by a joining creditor. (3) (New SG 70/1998) After the instituting of bankruptcy proceedings the expenses shall be collected on the bankruptcy estate. For this purpose the court may authorise the receiver to perform disposition by virtue of article 658 paragraph 1 item 8. (4) (New SG 70/1998) With the ruling pursuant
to article 707 the court shall sentence the debtor to pay the state fee due
and the incurred expenses, provided the reorganization plan pursuant to
article 705 does not provide otherwise. (5) (Former Paragraph 2 SG 70/1998, Amended SG 84/2000) State fees shall not be paid in advance in court cases instituted to complement the bankruptcy estate and on repeal claims. (6) (Former Paragraph 3, Amended SG 70/1998) No
state fees shall be collected for entry in the court register of circumstances
related to bankruptcy, as well as for entry and deletion of a restrain under
article 630, paragraph 1, item4, and a general attachment.
Subsidiary Application Article 621 Inasmuch as this Part contains no special provisions, the respective provisions of the Code of Civil Procedure shall apply. Section II Entry and Promulgation Entry and Promulgation of
Court Rulings Article 622 (Amended SG 70/1998,) Court rulings pursuant to Articles 630, 632, 641, 705 paragraph 2, Articles 707, 709, paragraph 1, Articles 710, 713 paragraph 2, Articles 735 and 744, paragraph 1, shall be entered into the respective court register and promulgated in the State Gazette. Entry and Promulgation of
Circumstances Related to the Receiver in Bankruptcy Article 623 (Amended SG 70/1998) The name and the address of the nominated receiver in bankruptcy, in the cases under Article 707 paragraph 2 item 2 - of the appointed procurator respectively, shall be entered into the respective court register and promulgated in the State Gazette. Term for Registration and
Promulgation Article 624 (1) (Amended SG 70/1998) The enacted rulings pursuant to Articles 622 and 623 shall be entered into the respective court register on the day of enacting thereof or at latest on the next working day. (2) Currently to the entering into the court register the court shall request promulgation of the court’s rulings pursuant to Articles 622 and 623. The promulgation shall be effected in the issue No.1 of the State Gazette as from the day of submission of the request or at latest in the next issue. CHAPTER THIRTY NINE INSTITUTING BANKRUPTCY PROCEEDINGS (Former Chapter 35 SG 83/1996)
Section I Start of Proceedings Instituting Proceedings Article 625 (Amended SG 70/1998, SG 84/2000) Bankruptcy proceedings shall be instituted pursuant to an application in writing submitted to the court by the debtor, respectively the liquidator or the creditors under a commercial transaction, as well as under public obligation to the state and municipalities related to the commercial activity of the debtor. Obligation for Declaration Article 626 (1) (Amended SG 84/2000) Any
debtor who becomes insolvent or overdraft shall be obliged to request within
15 days institution of bankruptcy proceedings. (2) (Amended SG 84/2000) The
application pursuant to paragraph 1 shall be submitted by the debtor, his heir,
the management body or respectively the liquidator of a company or a partner
with unlimited liability. (3) Procurators shall be obliged
to inform merchants in writing within 7 days about the insolvency. (4) Should the application be submitted by an agent, explicit power of attorney shall be required. Liability Article 627 Should persons fail observe their obligation for declaration pursuant to Article 626, paragraph 2, they shall be liable jointly and severally before creditors for damages caused by such delay. Attachments to the
Petition Article 628 (1) (Supplemented SG 84/2000)
Debtors, respectively liquidators shall attach to the application: 1. a transcript of the last
certified by certified public accountant annual accountancy report and balance
sheet as of the date of submission of application, provided the merchant is
obliged by law to prepare such documents; 2. inventory and evaluation of
assets and liabilities as of the date of submission of application; 3. list of creditors, indicating
the addresses, types, amounts and securities for receivables thereof; 4. inventory of personal
properties and properties that are joint matrimonial property - for sole
proprietors and partners with unlimited liability. (2) Creditors shall present with
their application the evidence in writing and indicate any other evidence for
the debtor's insolvency. (3) (New SG 103/1999) Debtors or
creditors shall apply to their applications documents pursuant to Article 20,
paragraph 6 of the Tax Procedure Code. (4) (Former Paragraph 3 SG 103/1999, Supplemented SG 84/2000) With their applications debtors or creditors may also propose a plan pursuant to Article 696, as well as to nominate a person fulfilling the requirements of ART. 655, Par. 2, who is to be appointed by the court for temporary assignee if the bankruptcy proceedings open. Consideration of Petitions Article 629 (1) (Amended SG 84/2000) Petitions to institute bankruptcy proceedings, submitted by debtors, respectively liquidators, shall be considered immediately by the court in camera. (2) (Amended SG 70/1998) Petitions to institute bankruptcy proceedings, submitted by creditors, shall be considered by the court in camera upon participation of the petitioner and debtor at latest within 14 days as from submission of the petitions. (3) (New SG 84/2000) Until the end of the first
session of the case opened upon a claim of creditor, other creditors can join
the proceedings, can make objections and present written evidence. (4) (New SG 103/1999) The court shall apply the provisions of the preceding paragraphs in case the application submitted entirely meets the conditions of Article 628. (5) (New SG 84/2000) The court shall open the case from the day the claim was filled and shall resolve it not later than 3-months from the opening.
Preliminary Security
Measures Article 629a (New SG 70/1998) (1) Upon the request of a creditor or ex officio, prior to enact the rulings on the petition to institute bankruptcy proceedings and where the preservation of the debtor’s estate demand it, the court may: 1. appoint preliminary a provisional receiver which shall have the powers pursuant to Article 635 paragraph 1; 2. allow the measures provided for under Article 630, paragraph1, item 4; 3. suspend the proceedings of execution on the debtor’s estate, except for the proceedings of execution instituted under the Law on Collection of the State Receivables; 4. allow the measures provided for under Article 642; 5. impose the measures as set forth in Article 650. (2) When the imposing of the measures under paragraph 1 is requested by a creditor, the court imposes these measures: 1. provided the request of the creditor is supported by justifiable evidence in written, or 2. in case a security is granted up to the amount fixed by the court for compensation of the damages caused to the debtor, provided it shall not be established that the debtor is insolvent, respectively overindepted. (3) The court may oblige the creditor to grant security also in cases under paragraph 2 item1. (4) All bankruptcy creditors shall profit from the security measures imposed by the court. (5) The court may repeal the security measures, provided that the continuation thereof is not indispensable regarding the purpose of the security. (6) The ruling of the court on the measures under paragraph 1 shall be announced to the person with respect to which the measures are imposed, as well as to the person, which has requested the imposition thereof. The ruling may be appealed within 7 days as from the receive of the announcement. (7) The ruling on the measures under paragraph 1 shall be subject to a prompt execution. The appeal shall not stop the execution thereof. (8) The security measures shall be considered repealed, when the petition to institute bankruptcy proceedings is refused upon an award which has entered into force. (9) The security measures imposed by the court shall be in force up to the date of the ruling on institution of bankruptcy proceedings. As from this date their effect shall be replaced by the effect of the ruling on institution of bankruptcy proceedings, as well as by effect of the measures enact under Article 630, paragraph 1, item 4. Pursuant to the Article 630, paragraph 1, item 4, the court may enact new security measures, as well as may continue the effect of the measures, already imposed upon this procedure.
Section II Issue of a Ruling Ruling on Institution of
Bankruptcy Proceedings Article 630 (1) (Amended SG 70/1998) Where the
court has established insolvency and respectively overindeptedness, by its
ruling it shall: 1. (Amended SG 70/1998) declare
insolvency, respectively overindeptedness and determine the initial date
thereof; 2. institute bankruptcy
proceedings; 3. appoint a temporary receiver in
bankruptcy; 4. allow for provision of security
by means of imposing attachment or other security measures. 5. fix a date for the first
meeting of creditors, not later than one month following the issue of the
ruling. (2) (Amended SG 70/1998, SG
84/2000) Where it is obvious that further continuance of the activity could
damage the bankruptcy estate, the court may, upon request by the debtor,
respectively the liquidator, the assignee in bankruptcy or creditor, declare
the debtor bankrupt and terminate his activity concurrently with the ruling to
institute bankruptcy proceedings. (3) The ruling on instituting bankruptcy proceedings shall be effective in respect of all. Ruling to Reject the
Application Article 631 The court shall reject the application, should it establish that the debtor's distress is temporary and that he disposes of sufficient assets to cover the obligations, safeguarding the creditors' interests. Ruling to Terminate
Proceedings Article 632 (1) Where the available assets are
insufficient to cover expenses related to the bankruptcy proceedings, the
court shall declare the insolvency, determine the initial date thereof,
declare the debtor bankrupt and terminate the proceedings, unless any person
concerned pays in advance the necessary amount. (2) The amount under paragraph 1 shall be reimbursed, provided the bankruptcy estate increases sufficiently. Appeal of Rulings Article 633 Rulings pursuant to Articles 630, 631 and 632 may be appealed within 7 days as from the date of promulgation in the State Gazette. Immediate Implementation Article 634 Rulings pursuant to Article 630 shall be implemented immediately. CHAPTER FORTY EFFECT OF RULING ON INSTITUTION OF BANKRUPTCY PROCEEDINGS (Former Chapter 36 SG 83/1996)
Date of Institution of
Bankruptcy Proceedings Article 634a (New SG 70/1998) The bankruptcy proceedings shall be considered instituted as from the date of the ruling under Article 630 paragraph 1. In case any actions under Articles 635, 636 paragraph 1, Articles 637, 638 and 646 are undertaken on this date, it shall be considered they are undertaken after the institution of bankruptcy proceedings.
Ruling of the Court on Claims at Opened Bankruptcy Proceedings Article 634b (New SG 84/2000) (1) The court shall rule in three days term on claims of participant in the proceedings except other term is provided for in the IV of this Law. In case the court’s act by which it shall rule, is subject to appeal, the court of appeal shall rule within seven days from the receipt of the complaint and shall give obligatory instructions. (2) If the judge that shall rule the case is absent, the chairman of the court of bankruptcy shall appoint another judge who shall rule the case during the absence. (3) Upon claim for resignation, the judge shall rule on it immediately. The definition which leaves without consideration the claim for resignation shall be subject to appeal to the chairman of the court of appeal, who shall rule on it within 3 days from the receipt.
Notifications for the Courts’ `Acts Article 634c (New SG 84/2000) (1) The activities of the debtor,
the creditors, the committee of the creditors, the meeting of the creditors,
the assignee in bankruptcy as well as the acts of the bankruptcy court, shall
be entered in a separate book which shall be public and be at disposal at the
office of the bankruptcy court. In the same book shall be entered the
decisions and definitions of the appeal and cassation court on complaints
against acts of the bankruptcy court. (2) Notices shall be send to the parties under the terms and conditions of the Civil Procedure Code for the decisions and definitions of the court subject to appeal.
Sending of Notifications for the Bankruptcy Proceedings to the Firm Case of the Debtor Article 634d (New SG 84/2000)
The bankruptcy court shall send a notice to the firm case of the debtor concerning decision on Art. 630; Art. 707, Par. 1; Art. 710, 735, 744 and 755 on the same day the decision has been taken. Restriction of Rights of
Insolvent Debtor Article 635 (1)(Supplemented, SG 84/2000/)
Upon institution of bankruptcy proceedings or in the cases under art. 629a the
debtor shall continue his activities under the supervision of the assignee in
bankruptcy. He may conclude new transactions with preliminary approval of the
assignee in bankruptcy only, and in compliance with the measures, determined
by the ruling on institution of bankruptcy proceedings. (2) The court may deprive the debtor of the right to manage and dispose of his assets and to grant this right to the receiver in bankruptcy, should it establish that by his actions the debtor jeopardises the interests of creditors. Performance of Money
Obligations Article 636 (1) The performance of obligations
to the debtor shall be taken over by the receiver in bankruptcy as from the
date of promulgation of the ruling on institution of bankruptcy proceedings. (2) (New SG 70/1998) The performance of an obligation made to the debtor after the date of the ruling on institution of bankruptcy proceedings, but before the promulgation thereof, shall be deemed valid, should the performer does not know about the institution of bankruptcy proceedings or even he knows in case the contribution is included in the bankruptcy estate. The good faith shall be presumed up to the establishment of the contrary one Suspension of Court
Proceedings Article 637 (1) )(Supplemented, SG 84/2000/) Upon institution of bankruptcy proceedings, court and arbitration proceedings under civil and commercial cases against the debtor shall be suspended. This shall not apply if, by the date of opening the bankruptcy proceedings on other case on which the debtor is a defendant, the court has admitted for joint consideration counter claim of the debtor or his objection for deduction. (2) (Amended SG 70/1998) Suspended proceedings shall be terminated, provided the receivable is accepted upon the terms of the Article 693, paragraph1, item1. (3) (New SG 70/1998) The proceedings suspended by virtue of the paragrahp 1 shall be renewed and continued by the participation of: 1. the receiver and the creditor, provided the receivables are not included within the list of the receivables accepted by the receiver or within the list approved by the court under Article 692; 2. the receiver, the creditor and the person, which has raised an objection, in case the receivables are included in the list of the receivables accepted by the receiver and in respect of which an objection is raised under the procedure of Article 692 paragraph 2. (4) (New SG 70/1998) The ruling under paragraph 3 shall have constitutive effect in respect to the relationships among the debtor, the receiver and all creditors in the bankruptcy.
Suspension of Execution
Proceedings Article 638 (1) Upon institution of bankruptcy
proceedings any execution proceedings against assets included in the
bankruptcy estate shall be suspended. (2) Where within the period as
from the suspension pursuant to paragraph 1 through the date of promulgation
of the ruling on institution of bankruptcy proceedings payments have been
effected to claimants, the moneys paid shall be returned to the bankruptcy
estate. (3) (Amended SG 70/1998, SG 103/1999) Where actions have been undertaken in favour of secured creditors for realisation of the security, the court may allow the proceedings to continue should a danger of jeopardising the creditor's interests exists. The amount received, which exceeds the amount of the security shall be included in the bankruptcy estate except for the properties pursuant to Article 159, Paragraph 1 of the Tax Procedure Code. Creditors After the Ruling
on Institution of Bankruptcy Proceedings Article 639 (1) Creditors of receivables that have occurred after the date of the ruling on institution of bankruptcy proceedings shall receive payment on maturity, and where they have not received payment on maturity or prior to the date of the ruling declaring the debtor bankrupt they shall be satisfied pursuant to the procedure under Article 722, paragraph 1. (2) Creditors pursuant to paragraph 1 may
obtain security for their receivables from the bankruptcy estate.
Special Cases of Sale Article 639a (Repealed SG 84/2000) Cooperation of Debtors Article 640 (1) (Previous Art. 640- Amended –SG
84/2000)Debtors shall be obliged to provide within 14 days from the opening of
the bankruptcy proceedings: 1. adequate information related to
the activities of their enterprises and their properties; 2. (Amended SG 90/1999) list of
payments in cash or by means of bank transfer, that exceed 1200 BGN and that
have been effected within three months prior to the initial date of
insolvency; 3. list of payments effected by the debtor to persons related thereto, for a period of one year prior to the initial date of insolvency. (2) (New SG 84/2000) If the debtor does not implement his obligation under Par. 1, the court shall impose the offensive person a fine from 500 to 1000 BGN.
Effect of Repeal of Ruling
on Institution of Bankruptcy Proceedings Article 641 (Amended SG 84/2000) The repeal of the ruling on institution of bankruptcy proceedings shall remove imposed prohibition and constraints, restore the authority of the debtor and terminate the authority of the receiver in bankruptcy from the moment of entry of the decision of the court of appeal or of the Supreme Court of cassation in the respective register. Security Measures Article 642 Upon request of the receiver in bankruptcy, the debtor or any creditor, the court may allow measures provided by law, securing the available assets of the debtor. CHAPTER FORTY ONE COMPLEMENTING OF BANKRUPTCY ESTATE. SAFEGUARDING MEASURES (Former Chapter 37 SG 83/1996)
Section I Complementing of bankruptcy estate Collection of Capital not
Paid In Article 643 Shares or contributions not paid in or not deposited by limited liability partners, shall be collected by the receiver in bankruptcy to complement the bankruptcy estate. Termination of Contract Article 644 (1) The receiver in bankruptcy may
terminate any contract to which the debtor is a party, provided it has not
been performed wholly or in part. (2) The receiver in bankruptcy
shall send a 15 days advance notice for termination of contract. (3) Upon request of the other
party the receiver in bankruptcy shall respond within 15 days whether he shall
keep the contract in effect or terminate it. Should there be no response, the
contract shall be considered terminated. (4) Upon termination of contract
the other party shall be entitled to compensation for damages incurred. (5) Keeping a contract under which the debtor is to effect regular payments shall not bind the receiver in bankruptcy to effect payments that have been overdue prior to the date of ruling on institution of bankruptcy proceedings. Set-off Article 645 (1) Creditors may set off their
obligations to debtors, provided prior to the date of the ruling on
institution of bankruptcy proceedings both obligations existed and were
reversibly directed to each other and of the same type and the receivable was
due. Where the receivable has become due in the course of bankruptcy
proceedings or as result of a ruling to declare bankruptcy, and also where
both obligations have become of same type as a result of such ruling,
creditors may set off only after the receivable becomes due or the receivables
become of the same type. (2) The statement of a set-off
shall be sent to the receiver in bankruptcy. (3) (Amended SG 70/1998) The
set-off may be declared invalid with respect to the creditors in the
bankruptcy proceedings, provided the creditor has acquired the receivable and
the obligation to the debtor prior to the date of the ruling on institution of
bankruptcy proceedings, but he knew as of the time of acquiring the receivable
or obligation that insolvency, respectively overindeptedness has occurred or
that an application to institute bankruptcy proceedings has been filed. (4) (Amended SG 70/1998) A set-off effected by the debtor after the initial date of insolvency, respectively overindeptedness shall be invalid with respect to the creditors in the bankruptcy proceedings, except for the part that the creditor may have acquired from distribution of assets converted into money, regardless of the time of occurrence of both reversibly directed obligations. Nullity of Actions and
Transactions Article 646 (1) (Amended SG 70/1998) The
following shall be considered null and void with respect to the creditors in
the bankruptcy proceedings, if effected after the date of the ruling on
institution of bankruptcy proceedings and not in compliance with the procedure
established thereby: 1. performance of an obligation
that has occurred prior to the date of the ruling on institution of bankruptcy
proceedings; 2. pledging or mortgaging rights
or chattels included in the bankruptcy estate; 3. transactions with rights or chattels included in the bankruptcy estate. (2) (Amended SG 70/1998) The acts and
transactions, effected by the debtor after the initial date of the insolvency,
respectively overindeptedness, shall be null and void with respect to the
creditors in the bankruptcy proceedings in case of: 1. performance of a money
obligation notwithstanding the method of performance; 2. gratuitous transactions in
property rights included in the bankruptcy estate; 3. pledging, mortgaging or
providing another security on property rights included in the bankruptcy
estate; 4. transactions against payment in property rights included in the bankruptcy estate, in case the payment exceeds significantly the value of the received one. (3) (New SG 103/1999) The preceding paragraphs
shall not be applied in cases of performance by the debtor of public
receivables or civil state receivables compulsorily collected pursuant to the
procedure for public receivables.
Actions to Repeal Article 647 In addition to the cases provided
by law, the following acts and transactions effected by the debtor may be
declared invalid with respect to the bankruptcy estate: 1. gratuitous transactions, except
ordinary donations in favour of a spouse, relatives of direct descent and
relatives of lateral branch to the sixth degree, effected within 3 years prior
to the institution of bankruptcy proceedings; 2. gratuitous transactions in
favour of third parties, effected within 2 years prior to the institution of
bankruptcy proceedings; 3. (Amended SG 84/2000)
transactions against payment, where the items given exceed considerably in
value the items received, effected within 2 year prior to the institution of
bankruptcy proceedings; 4. repayment of money obligation
by transfer of property, effected within 3 months prior to the initial date of
insolvency, where the return of the property could result in increase of the
amount to be received by creditors; 5. (Amended SG 84/2000)
mortgaging, pledging or providing another security in favour of a receivable
not secured till that time, effected within 1 year prior to the institution of
bankruptcy proceedings; 6. (Amended SG 84/2000)mortgaging,
pledging or providing another security in favour of a receivable of a partner
or shareholder not secured till that time, effected within 2 years prior to
the institution of bankruptcy proceedings; 7. (Amended SG 84/2000) transaction effected within 2 years prior to the institution of bankruptcy proceedings which jeopardises the creditors, where one of the parties thereto is a partner with unlimited liability, partner or shareholder who owns over 20 percent of the company capital, member of a management body or another person who controls the debtor or his activities. Return of Items Given to
Third Parties Article 648 Where the provisions of Articles 646 or 647 have been applied to transactions, the items given to third parties shall be returned, and where the items given are not found in the bankruptcy estate or moneys are owed, the third party shall become creditor. Bringing Actions to Repeal Article 649 (1) Actions pursuant to Article 645, paragraph 3, and Article 647 may be brought by the receiver in bankruptcy, and should he fail to do so - by any bankruptcy creditor within one year following the institution of proceedings. (2) (New SG 70/1998) By bringing actions to repeal by the receiver a state fee shall not be collected preliminary, provided the court recognises there are not sufficient money to pay the state fee. In case the court recognises the action the state fee due shall be collected by the sentenced party, and in case the court denies the action the state fee due shall be collected by the bankruptcy estate. (3) (Former Paragraph 2 SG 70/1998) Actions pursuant to Articles 645, 646 and 647 of this Law, as well as actions pursuant to Article 135 of the Law on Obligations and Contracts, related to the bankruptcy proceedings, shall be brought before the bankruptcy court. Section II Sealing Order for Sealing Article 650 (1) Should there exist danger of
dissipation, destruction or concealment of property, the court of jurisdiction
over bankruptcy may order the sealing of premises, equipment, transport
vehicles, etc., where chattels of the debtor are stored. (2) Inhabitable housing facilities and premises, needed to continue the activities of the debtor or to store perishable goods, shall not be sealed. Execution of Sealing Article 651 (1) Seals shall be fixed by a
court officer within 1 day following the receipt of order. (2) The court officer shall prepare and submit immediately to the court a protocol listing the sealed premises and chattels. Section III Inventory of Property Removal of Seals Article 652 Within 3 days following his entry into office, the receiver in bankruptcy must request removal of seals and preparing of inventory of real properties and chattels, moneys, valuables, securities, contracts, etc., of debtor's receivables and chattels in possession of third parties. Preparation of Inventory Article 653 (1) The inventory shall be
prepared by the receiver in bankruptcy and the bailiff. (2) The receiver in bankruptcy
shall inform the debtor of the acts under paragraph 1. (3) Should other properties be found after preparation of the inventory, supplementary inventory shall be prepared. Liability for Inventory
Property Article 654 The receiver in bankruptcy shall be liable for the property included in the inventory as from the time of preparation of the inventory, provided it has not been delivered to the debtor or to third parties for safe-keeping. CHAPTER FORTY -TWO AUTHORITIES AND MANAGEMENT OF THE BANKRUPTCY ESTATE (Former Chapter 38 SG 83/1996)
Section I Receiver Qualifications Article 655 (1) (Amended SG 70/1998) Natural
persons may become receivers. (2) (Amended SG 70/1998) The
receivers shall conform with the following requirements: 1. not to have been convicted as a
citizen of lawful age for general offence, except for the cases of
exoneration; 2. not to be spouse of the debtor
or creditor and not to be in kinship relations with any of them in direct
descent and lateral branch to the sixth degree, and in-law lineage up to the
third degree; 3. not to be a creditor in the
bankruptcy procedure; 4. not to be a bankrupt debtor whose rights have not been reinstated; 5. not to be in any relations with the debtor or creditor, which may generate substantiated doubts as to his impartiality. 6. (New SG 70/1998) to be graduated in Economics or in Law and to have at least 3 years professional experience on this subject; 7. (New SG 70/1998) to be included in the list of the persons nominated to became receivers, which is approved by the Minister of Justice and European Law Integration and promulgated in the State Gazette. 8. (New SG 84/2000) not to have been released
as a receiver in bankruptcy pursuant to Art. 657, Par. 2 of this Law and Art.
64, Par. 1 of the Bank Law; 9. (New SG 84/2000) not to have
been excluded , except by own will from the lists under item 7 and Art. 58,
Par. 2 of the Bank Law. (3) (Amended SG 70/1998,
Supplemented SG 84/2000 ) The Minister of Justice and European Law Integration
shall expel from the list under paragraph 2 item 7 the persons for whom it is
established that are commiting contravention in connection with their activity
as receivers, regardless whether the offense has been established by the
bankruptcy court. This amendment shall be promulgated in the State Gazette. (4) (Supplemented SG 84/2000 )
Receiver powers may be exercised by several persons. In such cases, decisions
shall be made unanimously and actions shall be undertaken jointly, unless the
meeting of creditors or court in case of dispute between the persons acting as
receivers, decides otherwise. (5) When receiver powers are exercised by several persons, making decisions unanimously and acting jointly, they shall be liable jointly and severally under Art. 663, paragraphs 2 and 3. Appointment of Receivers Article 656 (Amended SG 84/2000 ) (1) The bankruptcy court shall
appoint a receiver, elected by the first meeting of creditors, provided he
complies with the requirements under Art. 655 and has given his consent in
writing with a notary certified signature. The bankruptcy court shall
determine the date for the receiver’s taking of his duties upon the same
definition. (2) At his appointment the
receiver shall declare in written form with a notary certified signature
the presence of the requirements and the lack of the obstructions under this
Law, the participation in business companies as a partner, shareholder, the
occupation of liquidator, receiver or other paid positions. (3) If a change concerning the
circumstances under Par. 2 occur, the receiver shall be obliged to inform
immediately in writing the bankruptcy court. (4) The receiver shall be obliged to take duties at the date determined by the court. If this obligation is not fulfilled, within 7 days the bankruptcy court shall replace the appointed receiver with another person nominated by the first meeting of the creditors. If there is no such a person, another one from the respective list shall be the replacing person and a new meeting of the creditors shall be convened.
Discharge of Receivers Article 657 (1) The court shall discharge a
receiver in the following cases: 1. his request in writing sent to the court; 2. legal disability; 3. (New SG 70/1998) the appointed receiver does not meet the requirements of the Article 655, paragraph 2 anymore; 4. (Former Item 3 SG 70/1998) request by the
creditors entitled to two thirds of the receivables; 5. (New SG 70/1998) a decision of
the meeting of the creditors; 6. ( New- Former Item 5 SG 70/1998
– SG 84/2000) actual inability to exercise his powers; 7. ( New - Former Item 5 SG
70/1998 – SG 84/2000) death. (2) The court may discharge the
receiver at any time, in the course of the fulfilment of its judicial
obligations or at the proposal of the debtor, the committee of creditors or a
creditor, when such receiver fails to fulfil his obligations or his actions
jeopardise the interests of the creditor or the debtor. (3) (Amended SG 70/1998 ;SG
84/2000) A receiver discharged under paragraph 1, items 1, 3 and 4 and
paragraph 2 shall be obliged to perform his duties until a new receiver is
appointed. Receiver's Powers Article 658 (1) The receiver shall: 1. represent the enterprise; 2. manage its current affairs; 3. (New SG 84/2000) exercise supervision of the
activity of the debtor in the cases under Art. 635, Par. 1. Accountability Article 659 (1) (Amended - SG 84/2000)The
receiver shall enter each action on his part relative to the management and
administration of property or property rights of the debtor or from the
bankruptcy estate in a specially bound journal with numbered pages. When the
functions of the receiver are carried out by two or more persons the disputes
between them and the taken resolutions shall be entered in the journal. (2) The receiver shall submit
performance reports to the court on a monthly basis or immediately, at
request. (3) (New - SG 84/2000) The receiver shall present upon request by a creditor the journal under Par. 1 and the report under Par. 2, and also a report on all the creditors questions to which is not answered in the report. Due Care Requirement Article 660 (1) (Amended SG 70/1998) The
receiver shall exercise his powers with the due care of a commercial. (2) Receivers may not delegate their powers to other persons, except in case of an explicit permission by court. Remuneration Article 661 (Amended SG 84/2000) (1) Receivers shall get a remuneration for their work – current and final - as determined by the meeting of the creditors. Decision for the way of determination of the remuneration can be taken before the receiver has ended his activity. (2) The court shall determine the size of the current remuneration of the temporary receiver as well as of the receiver in case under Art. 657, Par. 6 at the time of his appointment.
(5) The final remuneration can also be
determined as a percent of the property that filled the bankruptcy estate
or/and as a percent of the value of the cashed assets. (6) In the cases when the meeting of the creditors was not able to decide to choose a receiver or the size of his remuneration, the decision for these shall be taken by the court. Restrictions Article 662 (1) (Amended SG 84/2000)The
receiver may not negotiate on behalf of the debtor either with himself or with
related person. (2) Receivers may not acquire in
any way, directly or through another person, any chattel or right from the
bankruptcy estate. This restriction applies also to the their spouses,
relatives in direct descent and lateral branch to the sixth degree and in-law
lineage up to the third degree. (3) Receivers shall not disclose
any information, data or facts which have become known to them in the course
of exercising of their powers. (4) (Repealed SG 70/1998) Liability Article 663 (1) Where the receiver fails to
perform his duties or performs them poorly, the court may impose a fine which,
for each individual case, may not exceed the amount of his monthly
remuneration. (2) The receiver is liable to pay
a compensation equal to the interest determined by operation of law for any
delay on his part to deposit the funds received in the bank. (3) The receiver is liable to compensate the debtor and creditors for the damage inflicted by him to them in the course of the exercising of his powers. Final Report of the
Receiver Article 664 (1) Receivers shall submit a report in writing upon the termination of their work within a term prescribed by the court. (2) The newly appointed receiver, the
debtor, the creditors' committee or a creditor may raise objections to the
report within seven days after its submission. (3) (Supplemented SG 84/2000)The
court shall, within 14 days from the receipt of the objection, issue a ruling
on the objection, which will be final and not subject to appeal. (4) Should no objection be raised within seven days, the report will be considered accepted. Submission of Books and
Property Article 665 (Amended SG 84/2000) Upon termination of his activities, the receiver shall immediately submit, by inventory list, the books the journal and the reports under Art. 659, as well as the property at his governance to the newly appointed receiver or a person designated by the court or to the debtor in the cases set forth in Art. 707, paragraph 1. Section II Provisional Receiver Appointment of Provisional
Receiver Article 666 (Supplemented SG 84/2000) The court shall appoint the provisional receiver with the ruling to start bankruptcy proceedings, or in the cases under Art. 657, provided he meets the requirements under Art. 655 and has given his consent. Discharge of Provisional
Receiver Article 667 (Amended SG 84/2000) The provisional receiver shall be discharged under the terms and conditions set forth in Art. 657 and upon the appointment of the receiver appointed by the meeting of creditors. Powers of the Provisional
Receiver Article 668 Provisional receivers shall enjoy
the powers under Art. 658. In addition, within 14 days after the date of the
ruling on bankruptcy proceedings, the provisional receiver shall prepare: 1. (Supplemented SG 84/2000) a
list of creditors on the basis of the debtor's books, stating the size of
their takings; 2. (New – SG 84/2000) abstract
from the commercial books certified him; 3. (Previous Item 2 – SG 84/2000)a report in writing on the reasons for the insolvency, the condition of the property and the measures taken to protect it as well as the possibilities for reorganisation of the enterprise. Section III First Meeting of Creditors Holding the First Meeting
of Creditors Article 669 (1) (Previous Art. 669 - Amended
SG 84/2000)The first meeting of creditors shall be convened on the date
scheduled by the court with the ruling to institute bankruptcy proceedings and
shall be chaired by a judge nominated by the chairman of the district court. (2) (New – SG 84/2000) The first meeting of the creditors shall be attended by the creditors included in the list under Art. 668, It. 1 and in the abstracts from the commercial books of the debtor which the temporary receiver shall present at the first meeting. Decision-Making at the
First Meeting of Creditors Article 670 (Amended SG 84/2000) (1) The first meeting of creditors
will be legitimate when it is attended by at least two creditors from the list
under Art. 668, It. 1 unless there is only one creditor in the list. The
participation of the creditors shall be personal or by representative with a
explicit written proxy. When the creditor is a natural person the proxy shall
be with notary certified specimen. (2) The decisions of the first meeting of creditors shall be passed by a simple majority vote of the size of the takings under Art. 668, It. 1 of creditors present. Participation of the
Provisional Receiver and the Debtor Article 671 The participation of the provisional receiver at the first meeting of creditors is mandatory, whereas the debtor may attend it if he deems it necessary. Powers of the First
Meeting of Creditors Article 672 (1) (Previous Art. 672 - Amended
SG 84/2000)The first meeting of creditors shall:
Section IV Meeting of Creditors Holding the Meeting of
Creditors and Voting Rights Article 673 (1) The meeting of creditors shall
be convened after the approval of the list under Art. 692 by the court. (2) After receivables are
accepted, voting rights at the meeting of creditors shall be granted only to
creditors with accepted receivables. (3) (Amended SG 70/1998) The court
may grant voting rights also to a creditor under Art. 637, paragraph 3,
provided his receivables are supported with convincing evidence in writing, as
well as to a creditor with not accepted receivables, provided he has appealed
the ruling under the Article 692. (4) No voting rights under paragraph 3 shall be granted to a creditor under Art. 616, paragraph 2. Convening of the Meeting
of Creditors Article 674 (1) The court shall convene the meeting of creditors upon the request of the debtor, receiver, creditors' committee or creditors holding one fifth of the amount of accepted receivables, not later than 7 days fro the receipt of the request. (2) The meeting of the creditors shall be convened immediately after the approval by the court of the list of the accepted under Art. 692, Par. 3, and if there are no objections – under Art. 692, Par. 1 with agenda under Art. 677, Item 8.
Invitation for the Meeting
of Creditors Article 675 (1) (Supplemented SG 84/2000)The invitation for
the meeting of creditors shall contain the trade name and seat of the debtor,
agenda, date, hour and venue of the meeting. (2) The invitation shall be promulgated in the State Gazette, the advertisement being considered due notification of all creditors. Decision-Making Article 676 (1) (Amended SG 84/2000) The
meeting of creditors shall be held, regardless of the number of persons
present and shall be governed by the judge who is responsible for the case. (2) During the decision-making
process, each creditor shall be entitled to a number of votes representing the
proportional share of his receivables in the total amount of accepted
receivables and the receivables with voting rights under Art. 673, paragraph
3. (3) Decisions shall be made by simple majority vote, unless the law prescribes otherwise. (4) (New SG 84/2000) The participation of the creditors in the meeting shall be carried out under the terms of Art. 670, Par. 1.
Powers of the Meeting of
Creditors Article 677 (1) The meeting of creditors
shall: 1. listen to the report of the
receiver on his activities; 2. hear the report of the
creditors' committee; 3. (Amended SG 84/2000) nominate
a receiver, if none has been nominated, and Art. 672, Rar. 2 shall apply; 4. (Amended SG 84/2000) make
a resolution for a discharge of the receiver and his replacement; 5. propose to the court the amount
of the receiver's remuneration or any alteration thereof; 6. appoint the creditors'
committee, if none has been appointed, or change its membership; 7. propose to the court the amount
of the subsistence for the debtor and his family. 8. (New SG 84/2000) determine the
methods and criteria for valuation of the debtor’s property and the size of
the remuneration of the assessors. (2) If the meeting of creditors
fails to make a decision under paragraph 1, item 3, the receiver shall be
appointed by the court. The court ruling shall not be subject to appeal. (3) Minutes shall be taken at the meeting of creditors and signed by the chairing person and the secretary of the meeting. (4) (New SG 84/2000) If the meeting of the creditors con not make a resolution on Par., It. 8, it shall be made by the receiver.
Effect of the Decisions
Made by the Meeting of Creditors Article 678 The decisions made by the meeting of creditors shall be binding on all creditors, including those absent. Repeal of a Decision of
the Meeting of Creditors by the Court Article 679 (1) The bankruptcy court may
repeal a decision of the meeting of creditors, at the request of the debtor or
a creditor, where such decision is unlawful or causes substantial damage to a
part of the creditors. (2) (Amended SG 84/2000) The
request shall be filed within seven days after the meeting is held and it
shall be examined by the court of jurisdiction over bankruptcy with the debtor
and creditors being summoned to the court session. The court session for the
consideration of the request shall be held not later than 14 days from its
filing. (3) Creditors under paragraph 2
shall be summoned through advertisement in the State Gazette. (4) (Amended SG 84/2000)The court shall rule by definition. Section V Creditors' Committee Options Article 680 (1) The meeting of creditors may
appoint a creditors' committee consisting of not less than three and not more
than nine members. (2) The creditors' committee shall include persons representing both secured and unsecured creditors, except for those under Art. 616, paragraph 2. Powers Article 681 (1) (Amended SG 84/2000) The
creditors' committee shall assist and check the activities of the receiver
with respect to the property management and inspect the books and cash
availabilities and shall inform the court in the cases under Art. 657. (2) Cash availabilities shall be inspected at least once a month and the findings shall be communicated to the court of jurisdiction over bankruptcy. Remuneration Article 682 (1) The members of the creditors'
committee shall be entitled to remuneration which is determined at the time of
their appointment at the expense of creditors. (2) The unpaid remuneration shall be deducted, at the request of the creditors' committee, when the property converted into cash is distributed according to the size of receivables on a pro rata basis. Property Acquisition Ban Article 683 Members of the creditors' committee shall not acquire in any way either directly or through another person chattels or rights from the Bankruptcy Estate. This restriction applies also to the their spouses, relatives of direct lineage, relatives of collateral lineage up to six times removed and in-laws up to three times removed. Subsidiary Application of the Law on Obligations and Contracts Article 684 As far as the relations between the creditors' committee and creditors are not settled with the provisions of this Part or with an agreement, the provisions of Arts. 280-292 of the Law on Obligations and Contracts shall apply. CHAPTER FORTY -THREE CLAIMING RECEIVABLES (Former Chapter 39 SG 83/1996)
Deadline for Claims Article 685 (1) (Amended SG 84/2000) Creditors
shall claim their receivables in writing before the bankruptcy court not later
than one month after the advertisement for opening of the bankruptcy
proceedings. (2) (Amended SG 84/2000) Each creditor shall indicate the grounds and amount of the receivables, privileges and security, the official address and present evidence in writing. List of Receivables
Claimed Article 686 (Amended SG 84/2000)
(2) The materials under Par. 1 shall be presented at the court office at disposal of the creditors and the debtor. Proprio Motu Entry Article 687 (1) (Previous Art. 687 - Amended SG 84/2000) The receivables of a worker or employee arising from a labour relationship with the debtor which have occurred up to one year prior to the decision to start bankruptcy proceedings shall be entered proprio motu in the list of receivables claimed by the receiver. (2) (New SG 84/2000) The receiver shall enter ex-officio in the list the claimed receivables and the established public receivable that has entered into force. Additional Claims Article 688 (1) (Amended SG 84/2000) Claims
made after the expiration of the term under Art. 685, paragraph 1, but not
later than five months, shall be entered on the list of receivables claimed
and accepted in accordance with the terms and procedures set forth by law. The
receivables not claimed within this period, which occurred before the opening
of the bankruptcy proceedings and for which there are no pending cases, cannot
be claimed under the said bankruptcy proceeding. (2) A creditor with claims under paragraph 1 may not challenge receivables already accepted or a distribution which has been made and he shall be satisfied with the balance if the property cashed in has been distributed. The additional expenses for the acceptance of his claim shall be borne by him. (3) (New SG 84/2000) Receivables not paid
at the payment date and that occurred after the date of the opening of the
bankruptcy proceedings until the approval of the recovery plan, respectively
the until the date of the declaring the bankrupt of the debtor, shall be
claimed under the rules of this Chapter. The receiver shall work out an
additional list for these receivables. (4) (New SG 84/2000) The inclusion of the receivables under Par. 3 in the additional list or in the account for distribution cannot be refused if the obligation has been acknowledged by the receiver and the debtor.
List of the Receivables
Accepted by the Receiver Article 689 (Amended SG 84/2000) (1) The receiver shall make an announcement in the State Gazette about the list compiled and its availability for creditors and the debtor at the court office. Challenge of the List Article 690 (1) (Amended SG 84/2000) The
debtor or creditor may object in writing against accepted or unaccepted
receivable before the receiver, and with a copy for the court, within 14 days
after the promulgation of the announcement for the presentation of the lists
and the report under Art. 686, paragraph 1. (2) The objection shall be
examined within 14 days after the expiration of the term under paragraph 1
jointly by the receiver, the debtor, the creditor whose presence on or absence
from the list is challenged and the creditor who has raised the objection. (3) (Amended SG 84/2000) Within 3
days from the examination under paragraph 2, the receiver shall make the final
decision relative to the exclusion or inclusion of the receivable in the list
of accepted receivables and communicate this decision to the persons under
paragraph 2. (4) (New SG 84/2000) Within 1 month from the expiration of the term under paragraph 1, the receiver shall present to the court:
Unchallengeable
Receivables Article 691 Receivables which have been established with a court ruling which has entered into force and was issued after the date of the decision to start bankruptcy proceedings, where the receiver was a party, cannot be challenged. Approval of the List of
the Receivables Accepted by the Receiver Article 692 (Amended SG 84/2000) (1) (Amended SG 70/1998) The list
of the receivables accepted by the receiver for which objections have not been
received under the rules of Art. 690, Par. 1, shall be approved by the court
on a closed session immediately after the presentation of the list under Art.
690, Par. 4, Item 1 by the receiver. The court shall rule by definitiobn. (2) The court shall consider the
received objections on an opened session not longer than 14 days from the
presentation of the list under Art. 690, Par. 4, Item 2. If it shall be
possible all the objections shall be considered on one court session. (3) When the court finds the
objections ground, it shall approve the list with the necessary change.
Otherwise the court shall leave the objections without any consideration. The
court shall rule within 14 days from the session on Par. 2 by a definition. (4) An announcement for the definition of the court for approval of the list shall be promulgated in the State Gazette. Accepted Receivable Article 693 (Amended SG 70/1998;84/2000) (1) In the bankruptcy proceedings
shall considered as accepted, a receivable which has been included in the list
approved by court under the Article 692 except the receivable under Art. 694,
Par.1.
Action to Establish A
Right Article 694 (New – SG 84/2000) (1) A creditor made objection
under Art. 690, Par. 1, can file a claim for establishment of the existence of
not accepted receivable or the non- existence of accepted receivable within 14
days from the promulgation of the definition of the court for approval of the
list under art. 692, Par. 1. The claim shall be filed at the bankruptcy court. (2) The state fee shall not be
paid in advance in the case of filing the claim under Par. 1. If the claim is
withdrawn the expenses shall be on account of the claimant, and if this is the
debtor or the receiver they shall be on account of the bankruptcy estate.
(3) The entered into force decision of the court under Par. 1 shall have an establishment effect on the relations between the debtor, the receiver and all the bankruptcy creditors. (4) In the recovery plan respectively at the
distribution of the cashed property shall be obligatory allocated reserves for
unaccepted receivable – subject of establishment under Par. 1. (5) The claim for establishment shall be considered and the court shall rule on it regardless of the bankruptcy proceedings. Expansion of the List Article 695 The list approved by the court shall be expanded with receivables claimed and approved subsequently under terms and procedures set forth by law. CHAPTER FORTY FOUR REORGANISATION OF THE ENTERPRISE (Former Chapter 40 SG 83/1996)
Reorganisation Plan Article 696 (Amended SG 84/2000) A reorganisation plan may provide for a deferment or rescheduling of payments, a remission of the debts in full or in part, a reorganisation of the enterprise, or undertaking other acts or making other transactions. Proposal of a Plan Article 697 (1) The right to propose a plan
shall belong to: 1. The debtor; 2. The receiver; 3. The creditors holding at least
one-third of the secured receivables; 4. The creditors holding at least
one-third of the unsecured receivables; 5. The partners, the shareholders
respectively, who hold at least one-third of the capital of the debtor
company; 6 An unlimited liability partner; 7. Twenty per cent of the total
number of the debtor's employees. (2) The creditors with the receivables specified under Art. 616, paragraph. 2, are not entitled to propose a plan. (3) (New SG 84/2000) In the cases under Art. 630, Par. 2 a recovery plan can not be proposed. Deadline for Proposing a
Plan Article 698 (1) (Amended SG 70/1998; SG
84/2000) A plan may be proposed not later than one month after the date of the
promulgation of the court decision for approval of the list of the receivables
accepted under Art. 692. (2) More than one plan may be proposed in the bankruptcy proceedings. Costs on the Preparation
of the Plan Article 699 The costs on the preparation of a plan proposed by the debtor or by the receiver shall be at the expense of the bankruptcy estate, and in the rest of the cases they shall be at the expense of the proposer. Content of the Plan Article 700 (1) The plan shall contain: 1. (Amended SG 84/2000) The extent
of satisfying the receivables, the manner and periods for paying the creditors
within each class, as well as guarantees for fulfillment of the disputed not
accepted receivables – subject of pending court proceedings by the date of
proposing the plan; 2. The terms and conditions under
which the partners in a general or limited partnership are relieved from their
commitments in full or in part; 3. The extent of satisfaction
received by each class of creditors as compared with what it would have
received in the event of distributing the assets under the terms and
procedures provided by law; 4. The guarantees provided to each
class of creditors in relation to the implementation of the plan; 5. The managerial, organisational,
legal, financial, technical, and other actions for the implementation of the
plan; 6. The influence of the plan on
the employment of the debtor's employees. (2) (Amended SG 84/2000) The plan may envisage the sale of the entire enterprise or part of it, the way and conditions of the sale, the buyer, a debt equity swap, novation, or taking other actions or making other transactions. (3)(New SG 84/2000) In the cases under Par. 2 a
market assessment of the property – subject to the respective transaction,
shall be attached to the recovery plan. The assessment under Art. 677, Par. 8
shall be considered and accepted simultaneously b the meeting of the creditors
with the consideration and adoption of the recovery plan. If the assessment
shall be accepted, the recovery plan shall not be considered and adopted by
the meeting of creditors. (4) (New SG 84/2000) When the recovery plan provides for a sale of the entire enterprise or part of it, a draft contract signed by the buyer shall be attached to the plan.
Admittance of the Plan Article 701 (1) (Amended SG 84/2000) By a
ruling, given in camera within 7 days after theexpiration of the term
under Art. 698, the court shall admit the plan to be considered by the
creditors' meeting, provided the plan meets the requirements under Art. 700,
Par. 1. The court shall specify the date of holding the meeting, not later
than 45 days after the date of the ruling. (2) (Supplemented SG 84/2000) If
the plan proposed does not meet the requirements under Art. 700, paragraph. 1,
the court shall send a notice to the proposer to remove the instances of
non-compliance within 7 days. This provision shall not apply in case of a
repeal of the court decision for approval of the recovery plan and returning
the case by the second-instance court for continuation of the proceedings. (3) The ruling on non-admittance of the plan is subject to appeal within 7 days. Announcement of the Plan
and Convention of the Creditors' Meeting Article 702 (1) (Amended SG 84/2000) The court
shall promulgate in the State Gazette an announcement of the date of
holding the creditors' meeting for adoption of the plan admitted for
consideration. (2) The debtor and the receiver shall be summoned to the meeting, and the creditors shall be deemed to be summoned by the promulgation of the announcement. Adoption of the Plan Article 703 (1) The right to vote on the plan
shall belong only to a creditor whose receivable has been accepted or whose
right to vote under Art. 673, paragraph. 1 has been recognised. (2) The creditors shall vote
separately in the following classes: 1. Creditors with secured
receivables and creditors with a foreclosure right; 2. Creditors under Art. 722,
paragraph. 1, sub-paragraph 4; 3. (Amended SG 70/1998) Creditors
under Art. 722, paragraph. 1, sub-paragraphs 6; 4. Creditors with unsecured
receivables; 5. Creditors under Art. 616,
paragraph. 2, (3) A creditor may also vote in
absentia, by a letter with a signature authenticated by the notary public. (4) (Amended SG 84/2000) The plan shall be accepted by each class by a simple majority of the size of the receivables of such class.
(6) (New SG 84/2000) A plan against which have voted more than one half of the accepted receivable, shall not be considered as accepted, despite of the classes among which the receivables are distributed. Approval of the Plan by
the Court Article 704 (1) The bankruptcy court shall
approve the approved plan if the requirements of the law have been observed. (2) (Amended SG 84/2000) In the
event that several plans have been approved, approved shall be the plan for
which have voted the creditors with more than one half of the accepted
receivables. If it can not be approved, shall be approved that plan which was
been approved by the creditor classes whose interests have been most injured. (3) (Supplemented SG 84/2000) The plan is approved in camera. In case objections have been entered to the plan accept by the creditors' meeting, the court shall consider the objections in camera, summoning the debtor, the receiver and the party which has entered the objection. If it shall be possible, all objections shall be considered at one session and within 14 days from session the court shall rule on them. Terms and Conditions for
the Approval of the Plan Article 705 (1) (Amended SG 70/1998) The court
approves the plan, provided: 1. The requirements of the law for
the acceptance of the plan by the different creditor classes have been
observed; 2. (Amended SG 84/2000) The plan
has been approved by a majority of the creditorswith more than one half of the
accepted receivables in the approved list under Art. 692, Par. 1 and 3. In the
event that the plan envisages partial payment, at least one of the creditor
classes which have approved it, shall receive partial payment; 3. All creditors of the class are
put on an equal footing, unless the injured creditors give their consent in
writing; 4. The plan ensures that a
dissenting creditor and a dissenting debtor receive the same payment which
they would have received if the assets were allocated under the terms and
procedures provided by law; 5. No creditor receives more than
is due under this creditor's accepted receivable; 6. No income is envisaged to be received by a partner or shareholder until the final payment of the obligations to the class of creditors whose interests are affected by the plan; 7. No support of a sole proprietor, unlimited
liability partner or their families, greater than the support ruled by the
court is envisaged up to the final fulfilment of the obligations to the class
of creditors whose interests are affected by the plan. (2) (New SG 70/1998) The court
shall enact the ruling on approval, respectively deny of the plan on
reorganisation of the enterprise.
Effect of the Plan
Approved Article 706 (1) The plan approved by the court
is mandatory for the debtor and the creditors whose receivables have occurred
before the date of the ruling to institute bankruptcy proceedings. (2) (New SG 70/1998) The
guarantees and the persons pledged or mortgaged for securing an obligation of
the debtor, as well as the persons jointly liable to him, except for the
persons upon Art.610, may not use the incentives provided for in the plan.
Term of the Conclusion of the
Contract (New SG 84/2000) (1) The term of the conclusion of
the contract on sale of entire enterprise or a part of it, according to the
approved recovery plan, shall be one month from the entry into force of the
decision for approval of the plan. (2) If within the term under
Par.1, a sale contract is not concluded according to the draft of the approved
recovery plan, each of the parties can, within one month from the expiration
of the term under Par., claim at the bankruptcy court to declare the contract
for concluded according the draft on Art. 700, Par. 4, accepted a the meeting
of the creditors. (3) If within the term under Par.2, none of the parties claims declaring the contract for concluded, and if there is a request from a creditor, the bankruptcy court shall open again the proceedings and declare the debtor bankrupt.
Termination of the
Bankruptcy Proceedings Article 707 (1) By the ruling to approve the
plan, the court terminates the bankruptcy proceedings. Appeal (New SG 70/1998) (1) (Previous Art. 707a – Amended SG 84/2000) The ruling under Art. 707 paragraph 1, as well as the ruling, which enacts the deny of the court to approve the plan on reorganisation of the enterprise of the debtor accepted by the creditors, shall be subject to an appeal within 7 days as from the promulgation in the State Gazette. (2) (New SG 84/2000) After the repeal of the
decision of the court, the recovery proceedings shall not be carried out.
Writ of Execution Article 708 A creditor may procure a writ of execution for his transformed receivable on the grounds of the plan approved by the court. Resumption of the
Bankruptcy Proceedings Article 709 (1) (Amended SG 70/1998; SG 84/2000) In the event that the debtor does not fulfil his obligations under the plan, the creditors whose receivables have been thereby transformed and account for at least 15 per cent of the total size of the receivables, or the receiver under the terms and conditions of Art. 706, Par. 3, may request a resumption of the bankruptcy proceedings, without new insolvency, respectively overindeptedn |