Liquidation of an OOD (LLC) or EOOD (single-member LLC) in Bulgaria

Opening a company in Bulgaria is very simple, and it is available not only to citizens of the country but to foreigners as well. Many people set up an OOD (LLC) or an EOOD (single-member LLC) in order to buy land or a car, since this is a simple and legal way to get around certain restrictions provided for by Bulgarian legislation.

Later on, the need for the company may disappear. The reasons may vary – ceasing operations, selling property, re-registering a car in the name of a private individual. And this is where an unpleasant surprise awaits many people: closing a company takes considerably more time and effort than opening one. While setting up a legal entity often takes less than a week, liquidating it takes at least six months, and more often than not the process drags on even longer.

The procedure consists of two stages and begins with the decision to liquidate and the setting of the timeframe for this procedure. An audit and proper preparation of the company for liquidation are often required, so as to avoid running into difficulties during the process or moving on to bankruptcy proceedings, which are undesirable and carry consequences for the manager.

THE BEGINNING

The first stage takes a minimum of six months. During this time it is necessary to:

• Cease the company’s activity.
• Terminate the contracts with the company’s employees.
• Appoint a liquidator.
• Notify the National Revenue Agency (NAP) of the upcoming closure of the OOD or EOOD.
• Pay off all outstanding taxes and social security contributions with NAP.
• Obtain from NAP a certificate under Art. 77, para. 1 of the DOPK after the debts have been paid.
• Prepare the initial liquidation balance sheet.
• Submit the package of documents to the Registry Agency and announce the liquidation of the OOD.
• Publish a notice to creditors – persons to whom the company being closed has any obligations or debts.
• Pay off the debts.

A liquidator must be appointed – the person responsible for liquidating the company. This is usually the company’s Manager. He is entered in the Commercial Register and provides a notarised consent with a specimen signature.

The liquidator’s duties include completing current transactions, collecting receivables, realising property and satisfying creditors’ claims. He also has the right to enter into new transactions, but only for the purposes of liquidating the company. If there are several liquidators, they may represent the company only jointly.

After the procedure begins, the accountant draws up an initial liquidation balance sheet as at the date the company ceased its activity.

Creditors may bring claims and demands against the company within 6 months of the publication of the notice to creditors — “Покана на кредиторите”. The property of the OOD remaining after these claims have been satisfied is distributed among the partners. If a creditor ignores the notice and does not bring any claim, the amount due to him is placed in a bank account opened in his name. If any debts turn out to be disputed, the process drags on and the property is distributed only after the creditor has received compensation. Once all creditors have been satisfied, the company’s receivables may be written off by decision of the management or of the court.

COMPLETION

The second stage includes the following steps:

• Notifying the NOI (Националният Осигурителен Институт) of the upcoming closure of the OOD.
• Obtaining from the NOI a certificate under Art. 5 of the KSO.
• Distributing the property and preparing the final liquidation balance sheet.
• Submitting the documents (application, certificate from the NOI, final balance sheet and the decision approving it, the liquidator’s report and declarations) to the Registry Agency and the subsequent liquidation of the company with its removal from the Commercial Register.

The process is governed by the “Liquidation” chapter of the Commercial Act (TZ). It states that the liquidation period may be extended. In any case, the procedure cannot take less than six months. Under Art. 272, para. 1, the company’s property is distributed only after six months have passed since the publication of the notice to creditors in the Commercial Register.

During liquidation, the note “в ликвидация” must be added to the company’s name, unlike bankruptcy announcements, where the note “в несъстоятелност” is used.

After the documents, including the final liquidation balance sheet and the explanatory note to it, have been submitted to the Registry Agency, the company is liquidated within three to five working days.

Handling a company’s liquidation on your own is difficult. Because of the nuances of the legislation, it is better to entrust this procedure to financial specialists or a lawyer.

If you turn to the Bulgarian Expert Company, our specialists will prepare and complete all stages of the company’s liquidation without your involvement. This requires a power of attorney and a set of documents on the financial and business activity for the entire period of operation, if any was carried out, including the accounting and reporting records.

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