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Financial difficulties - Bulgaria

Updated 09/2011

Legal requirements

Business stabilisation

There are many reasons why a business may run into financial difficulties - poor management, recession, etc. This may result in difficulties in paying some of your creditors, suppliers or staff.

Sale of shares

Shares are bought and sold on the Bulgarian Stock Exchange in Sofia. Only investment brokers can trade on the stock exchange. Investment brokers are companies which meet particular legal requirements and are licensed by the Financial Supervision Commission.

To buy or sell shares, you need to hire an stockbroker. Almost all banks are licensed stockbrokers.

  • Public Offer of Securities Act (ZPPTsK) български
  • Financial Instruments Markets Act (ZPFI) български
  • Financial Supervision Commission Act (ZKFN) български
  • Companies with Special Investment Aims Act (ZDSITs) български
  • Law Against Abuse of the Financial Markets (ZSPZFI) български
  • Credit Institutions Act (ZKI) [254 KB]български

Loans

When a company runs into financial difficulties, it could also take out an operating loan from a bank. Different banks have different conditions for approving credits depending on the credit required, your credit rating, what the credit will be used for, the repayment period and the collateral offered.

Banks charge fees to consider credit applications and to manage a particular credit, and require other forms of payment based on their conditions and rates. The bank should tell you about these, because many of them are deducted when the credit is issued.

Fees are usually based on a percentage of the credit requested, and in the case of larger credits, borrowers may find they have a smaller sum of money than they initially expected.

When submitting a credit application, the following documents are usually required:

  • a credit application form;
  • documents to confirm the company's legal status;
  • financial reports for the previous two years and the most recent current period;
  • a declaration regarding the person signing the application;
  • a declaration of civic and property status;
  • a business plan;
  • documents relating to the collateral.

Sales of surplus assets

Another way of stabilising your finances is to sell surplus assets. Before doing so, however, you need to consider the matter carefully.

Restructuring

Another option is restructuring. Various ways of achieving better results include cuts or transfers.

Access to different sources of finance can help overcome financial difficulties.

When filing for bankruptcy is the only option left for a business owner, it pays to cut your losses, initiate proceedings sooner rather than later, and move on to a new project.

Check also the legislation on this topic in:

  • References

    Legal texts

    • Guaranteed Payments to Employees during Employer Insolvency in Bulgaria Act (ZGVRSNRB) български
    • Public Offer of Securities Act (ZPPTsK) български
    • Financial Instruments Markets Act (ZPFI) български
    • Financial Supervision Commission Act (ZKFN) български
    • Companies with Special Investment Aims Act (ZDSITs) български
    • Law Against Abuse of the Financial Markets (ZSPZFI) български
    • Credit Institutions Act (ZKI) [254 KB]български

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Further help

You can get advice from experts of the Bulgarian Small and Medium-sized Enterprise Promotion Agency, the Bulgarian Chamber of Commerce and Industry and specialised consultancies.