Dissolution and liquidation of trading companies in Bulgaria
The liquidation is the last stage of existence of a trading company. At this stage, the trading company still exists as a legal entity but does not exercise business activities or does commercial transactions. The merchants keep their commercial character until their removal from the register. The liquidation is the consequence of the dissolution of business activities.
The liquidation is an out-of-court procedure. Its aim is to divide the assets of the company between the partners. The liquidation procedure is regulated in chapter 17 of the Commercial Code. According to Article 266 of the Commercial Code, the procedure is conducted by one or more liquidators. Liquidators may be appointed by the general meeting, by the partners with unlimited liability or by the court. According to Article 269 (1) of the Commercial Code, the notarially certified consent and the specimen signature are recorded in the commercial register. The liquidators are entrusted with the responsibility of managing and representing the company.
The liquidation takes place in 4 stages:
- At the first stage, the business activities of the company are stopped, a liquidator is appointed and a period of time regarding the dissolution is set. Further, the creditors of the company must be notified; this notification is recorded in the commercial register.
- At the second stage, the volume of the company’s assets at the time of the liquidation must be established. The liquidator must submit a report and a balance sheet to the general meeting.
- The third stage of the liquidation comprises the recovery of outstanding claims, the fulfilment of all obligations as well as the transformation of the company’s assets into money. New transactions may only be concluded if they have any connection with the liquidation. To complete the liquidation, all creditors must be satisfied. Article 267 of the Commercial Code supposes that the creditors must demand their claim due to the published invitation.
- At the last stage, the entire assets that remain after the fulfilment of the obligations and the recovery of outstanding claims are divided between the partners. Only after this, the liquidators may apply for the deletion of the company from the commercial register.
Article 274 of the Commercial Code holds the possibility that a company may be continued under certain conditions. This is only possible if the dissolution was implied by a time period or a decision of the competent body of the company and if the division of the assets between the partners has not yet begun. Further, the continuation requires the resolution of the managing bodies and on the part of the liquidators the publication of the resolution in the commercial register.
According to Article 611 of the Commercial Code, insolvency proceedings may be opened over the company if in the course of the liquidation procedure the company’s insolvency has been noticed.