Section I General Provisions

(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.

(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.

(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(Repealed, Former Paragraph 2, Amended - SG 70/1998, SG 84/2000) Insolvent shall be deemed merchants who are unable to perform due and established on grounds money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.

Bankruptcy proceedings shall be instituted also for persons who conceal commercial activity through insolvent debtors.

Concurrently with instituting bankruptcy proceedings for commercial company, bankruptcy proceedings shall be considered open, also for unlimited liability partner therein.

(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.

(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.

The court of jurisdiction over bankruptcy shall be the district courts where the seat of the merchant is located.

(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.

(3)

(Repealed - 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.

(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.

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.

(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.

(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.

(1)

In the course of bankruptcy proceedings creditors shall retain their rights on securities provided.

(2)

(Repealed - SG 70/1998)

(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.

(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.

Inasmuch as this Part contains no special provisions, the respective provisions of the Code of Civil Procedure shall apply.

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