REORGANISATION OF THE ENTERPRISE

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.

(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;

(a)

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.

(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.

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.

(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.

(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.

(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.

(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.

(5)

An objection to the approved plan may be filed with the bankruptcy court within 7 days after the date of the voting.

(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.

(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.

(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.

(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.

(3)

(Former Paragraph 2 SG 70/1998) The receivables of the creditors under paragraph 1 shall be transformed in accordance with what is envisaged in the plan.

(4)

(Former Paragraph 3 SG 70/1998) The debtor is obliged immediately to carry out the structural changes envisaged by the plan.

(5)

(New - SG 70/1998) In case of sale of the entire enterprise or a part thereof the acts on disposal performed by the buyer before the completely payment of the price shall be deemed null and void in respect to the creditors on the bankruptcy.

(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.

(1)

By the ruling to approve the plan, the court terminates the bankruptcy proceedings.

(2)

(Repealed - SG 84/2000)

(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.

A creditor may procure a writ of execution for his transformed receivable on the grounds of the plan approved by the court.

(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 overindeptedness, having to be proved.

(2)

In the cases under paragraph. 1, the transforming effect of the plan with regard to the creditors' rights and the security remains.

(3)

(New - SG 70/1998) Within the resumed bankruptcy proceedings may not be carried out proceedings on reorganisation of the enterprise.

(4)

(New - SG 84/2000) The request under Par. 1 shall be considered by the court within 14 days from its filing at open court session with summoned the creditor who has made the request and the debtor.

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