If your company is subject to compulsory liquidation

The deadline for re-registration has passed. Now all companies that have failed to meet the deadline will be liquidated. Most Britons have registered companies as holdings of their property in Bulgaria. the compulsory liquidation will put their properties on tender and will sell them before the company is closed. So what they can do?

Make sure you have someone to check your company file on a regular basis. This way you can find who is appointed by the Commercial register as a company liquidator. Once you know his details, you can contact him and discuss with him the options to transfer the property to the company owner without actually putting it on tender. This is one of the options the Commercial Act gives to the company owners i.e. instead of cashing the company assets, the liquidator can distribute the assets to the shareholders after he has paid the liquidation expenses, taxes and liquidator's remuneration. you need to be persistent on this, since not every liquidator will agree to do it. Therefore it is advised that you hire a solicitor to negotiate on your behalf.

Smartpartners-BG Ltd. declared bankrupt by Sofia City Court

Smartpartners-BG Ltd. - the developer of The Orchard, Bansko- have been declared bankrupt by Sofia City Court on 18.01.2012. The court resolution is sent by the court to the Commercial Register for announcing. It will be officially announced probably next week.

You can download the court decision in Bulgarian language from this link [PDF -1.1 MB].

As from the moment of announcing the court resolution, all creditors will have 1 month to present their claims to the administrator (through court). The court will review and decide whether to join the creditors or not. If they are allowed to join, they will benefit from all assets that are cashed by the administrator.

Misinterpretation of the new changes to transport licensing in Bulgaria

It's astonishing how journalists write about something that they don't check thoroughly. A couple of days ago an article appeared in one of the major news websites for Bulgarian news in English language. The news is totally misinterpreted. They speak about promulgated new ordinance (regulation) which changes the transport company license regime, so that re-licensing is needed by the end of the year. The same news also appeared in Bulgarian and is distributed by a Bulgarian news agency.

This brings unnecessary fears to all owners of transportation companies. I have posted about the future amendments of the said regulation. The truth is that the amendments are not yet adopted by the Ministry of Transportation. A draft has been published on the Executive Agency "Automobile Administration". The agency now has put this to discussion among the industry members. Few has already objected some of the amendments such as The Bulgarian Association of Freight Carriers. Their main concern is the new requirement for proving financial stability i.e. presenting company annual accounts, signed by certified financial auditor. The signature of certified auditor is not required pursuant the current regulations. The association thinks that this is contradicting with the Accounting Act which stipulates which companies are obliged to present annual accounts, singed by certified financial auditor.

The Association's fears are ungrounded. The truth is that most of the transportation companies don't meet the financial stability requirements and this new amendment will reveal this. No certified auditor will sign accounts that are not correct. But that's not really a problem and I don't understand why the association is making a problem out of it. If a transportation company doesn't possess enough capital to meet the financial stability requirements, they just can sign an insurance policy that will cover the rest of the assets that the company is short of. In that sense the new amend mends are quite favourable, we just need to wait and see how much the insurance policy will cost.

ADR: transportation of dangerous goods by road in EU

As a member of EU, Bulgaria has adopted the European Agreement concerning the International Carriage of Dangerous Goods by Road, also known as ADR. The transportation of dangerous cargo by road is regulated thoroughly by this agreement, but some specifics in the regulation are delegated to the national legislation and authorities.

Bulgarian Agency  "Transport Administration" has adopted a regulation of what a transport company needs to do/not do in order to be able to carry/load/unload dangerous cargo. First of all, the carriage company needs to obtain transportation license by the Agency. Dangerous goods require special treatment therefore a special permit needs to be issued by the Agency if the company carries dangerous materials.

The main prerequisite for obtaining the permit is hiring a dedicated employee who will consult on every stage of the transportation process. This employee has to attend and successfully take special exams organized by the Agency "Transport Administration". The consultant receives an ADR certificate which is for the particular category of dangerous materials that the exam has covered.

Secondly, the truck drivers also need special qualification in order to be able to drive dangerous cargo. They also need to sit a test and successfully take it in order to be able to practice that job. Each driver is allowed to drive only that category of dangerous material for which he/she has taken the exam. The driver receives a special ADR certificate which is recognized abroad.

The vehicles that carry the dangerous cargo has to meet the ADR requirements too. I will provide details on the vehicle requirements in a future post.

Financial stability requirement for transportation companies

One of the major requirements for granting transportation license in Bulgaria (and EU)  is the requirement for financial stability of the applicant. Currently the requirements involve possession of own capital minimum of €9000 for first vehicle and €5000 for each following vehicle. If that amount cannot be covered by the capital of the applicant, there is another option. The transportation company need to provide a bank guarantee, that will cover the aforesaid amounts. Currently those are the two options available that can be used to prove financial stability of the applicant.

An amendment in Regulation №11  is introducing one more option for proving financial stability. The applicants can sign an insurance policy that will cover the aforesaid amounts. The policy need to be signed for at least one year in order the Agency to accept it. Currently this option is not in force, but will be very soon.

Cargo and Passenger Transportation at Own Expense

The regime for transportation of cargo and passengers at the expense of the vehicle owner is regulated by  Council Regulation (EEC) No 684/92 of 16 March 1992 and consequently amended with Council Regulation (EC) No 11/98 of 11 December 1997. In general, the regulation of this type of transportation follows in a straightforward way, the aforesaid regulations.

As a summary I can point out just the main difference between the two type of transportation:

  1. Transportation at own expense and
  2. Occasional transportation (paid)

1  doesn't require transportation license but requires a certificate. The regime for obtaining such certificate is quite straightforward - just enclose all necessary documents and notify the Executive Agency for Vehicle Administration. You need such certificate if your company owns a vehicle (bus or truck) and delivers cargo/passenger, but for the purpose of your own company and not for third parties against pay. In short, you don't offer transportation to third parties for money.

2 requires transportation license. The regime involves providing a proof of financial stability of the company and numerous additional requirements that need to be met, before the license is granted. You will need such license if you offer transportation services to third parties as main commercial activity (for pay)

Balchik Golf Heights woes

[NB]: Please read Mike's comment below for more accurate information.

Since the developer of Balchik Golf Heights was forced to insolvency procedure, the developer continues to struggle. It turns out that even the sole owner of the capital of Varna Estates Ltd. - KMB Best of Bulgaria Properties and Services Ltd. (company No 131280900) - has also entered bankruptcy procedure. This makes collection of any creditor's money difficult since the court fees for the bankruptcy administrator for both companies has to be paid by its creditors. Both procedures have been stalled because neither the insolvent companies, nor the creditors are able to pay the court and administrator fees. The proceedings will be stalled for 1 year. If they  are not renewed accordingly, the companies will be dissolved automatically by the court and nobody will get refund. Unfortunately this is just the beginning of mass bankruptcy wave of property developers that will follow.

Developer of Balchik Golf Heights enters bankruptcy procedure

The developer of "Balchik Golf Heights" apart complex - Varna Estates Ltd- has been declared insolvent by Varna District Court. The proceedings have been initiated by a group of apartment buyers whose title deeds hasn't been transfered to them. The procedure is in its beginning because the creditors need to pay the court fee. The case is suspended for indefinite period of time, but all Varna Estates Ltd assets has been seized and cannot be disposed. Creditors are encouraged to hire a solicitor and join the insolvency procedure in order to get a refund from the current assets of the company.

"Balchik Golf Heights" is one of the many unfortunate developments which hasn't been finished in full. The property bubble has popped for Varna Estates Ltd too. Now it's up  to the bankruptcy administrator to collect and sell as much as they can from Varna Estates Ltd assets in order to refund the buyers.