Simplified company liquidation procedure in Bulgaria: conditions and stages

With the entry into force of the amendments to the Commercial Act, the so-called accelerated liquidation procedure was introduced. It is intended to significantly shorten liquidation timeframes, which can now be around four months, and it also simplifies certain formal procedures.

What is liquidation?

Liquidation is the process of winding up a company’s operations, as a result of which it officially ceases to exist. At this stage, production and commercial activity ends, the business leaves the market and begins settling all of its obligations.

It is important to distinguish liquidation from bankruptcy. Liquidation is carried out where the company is solvent and is, as a rule, initiated voluntarily — by decision of the owners. Bankruptcy, on the other hand, occurs in cases of financial insolvency and is often compulsory in nature.

Who can use the accelerated procedure?

Simplified liquidation is available to all types of commercial companies: EOOD (single-member LLC), OOD (LLC), EAD, AD, as well as partnerships. However, a number of conditions listed in Article 274a of the Commercial Act must be met:

• The company has not carried out economic activity for at least 12 months;
• It has no employees, and the employment contracts were terminated at least a year ago;
• The company is not registered for VAT or ended such registration more than 12 months ago;
• There are no debts to state or municipal authorities;
• There are no ongoing audits or acts from the National Revenue Agency (NAP) establishing tax liabilities or liabilities for insurance contributions;
• The company is not a party to court proceedings, is not a debtor in enforcement proceedings, and no case has been brought against it under the special laws on pledges or financial contracts.

Compliance with these conditions is confirmed by a declaration filed by the liquidator together with the documents on the winding up of activity.

Stages of accelerated liquidation

Adopting the liquidation decision

The decision is taken by:

• The general meeting (in the case of an OOD);
• The sole owner (in the case of an EOOD).

Minutes are drawn up recording the decision to wind up the company’s activity and to appoint a liquidator.

Registration in the Commercial Register

The following are filed:

• The liquidation minutes;
• An application in the prescribed form (A4/A1);
• A notarised specimen signature of the liquidator;
• Other required documents.

The company receives the status “in liquidation.

Notification of creditors

A notice to creditors inviting them to submit their claims is published in the Commercial Register.

The waiting period is at least 6 months. This period may be shortened if the conditions for the accelerated procedure are met.

Carrying out liquidation actions

The liquidator:

• Settles obligations (finds a way to pay them or discharge them otherwise);
• Disposes of assets;
• Repays debts (if any);
• Draws up the liquidation balance sheet.

Distribution of assets

The property remaining after settlements is distributed among the partners (owners).

Completion of the liquidation

The following are filed with the Commercial Register:

• The liquidation report and balance sheet;
• The minutes approving the liquidation;
• The application to strike the company off the Commercial Register.

The company officially ceases to exist and is struck off the register.

Conclusion

The accelerated procedure for liquidating companies in Bulgaria is a significant relief for entrepreneurs seeking to formally cease operations without dragging the process out. The legislative changes make it possible to considerably reduce timeframes and administrative barriers, provided the established criteria are met. This option is especially relevant for inactive companies that conduct no business but remain listed in the register. Applying this procedure correctly and in good time ensures legal cleanliness and reduces risks for former owners and managers.

It should be remembered that the liquidator plays a key role in this process — they bear legal responsibility for properly winding up the company’s activities, settling obligations and protecting the interests of all parties.

Despite the simplifications, accelerated liquidation still requires careful compliance with the established conditions and the filing of the necessary documents. The associated costs must also be taken into account: notary and state fees, accounting services, and in some cases inspections by the tax authorities are possible.

Important: even if the company has no activity, it is required to file an annual report and a liquidation balance sheet, and to certify that it has no debts to the state or the municipality. In exceptional cases, the liquidation may be suspended or cancelled if the situation changes or a decision is taken to resume operations.