Company Insolvency in Bulgaria: Procedure and Creditor Rights (2026)

Bulgarian company insolvency is a collective court process, not simply another way for owners to close a business. It begins when a trader can no longer meet qualifying due debts, or when a company covered by the balance-sheet test has insufficient property to cover its liabilities. The court fixes the legally relevant starting date, protects the estate, appoints an insolvency practitioner and gives creditors a controlled route to prove and recover claims.

Waiting for every bank account to reach zero is dangerous. The filing duty may already be running while the company still makes selected payments, negotiates with lenders or owns valuable but illiquid assets. Directors therefore need a documented legal, cash-flow and balance-sheet assessment as soon as distress becomes persistent.

This guide provides general information as at 1 August 2026. It is not legal, insolvency, litigation, tax, accounting, employment, valuation or criminal-law advice for any particular debtor, director or creditor.

Company Insolvency at a Glance

Identify the Legal Trigger, Not Just a Bad Month

The current Commercial Act defines insolvency in Article 608 by reference to inability to perform a due monetary obligation arising from or connected with a commercial transaction, a business-related public obligation to the state or a municipality, a private state claim, or qualifying unpaid wages. Over-indebtedness under Article 742 asks whether the company's property is sufficient to cover its liabilities.

These tests are different. A company may own assets worth more than its debts yet be unable to turn them into cash when payment is due. Another may still pay today while its asset base no longer covers its liabilities. Temporary difficulty is not enough: Article 631 requires the court to reject the petition if the problem is temporary or sufficient property can cover the debts without endangering creditors.

Statutory presumptions matter. Insolvency may be presumed where payments have stopped, even if a few selected creditors are still paid; where the last three annual financial statements were not announced before the petition; or where an enforcement claim covered by Article 608 remains wholly or partly unpaid for six months after the invitation or notice for voluntary performance. A board memo should therefore reconcile cash forecasts, aged payables and receivables, enforcement files, security, contingent liabilities, asset values and recent payments—not rely on one accounting ratio.

The 30-Day Duty and Who Can Petition

Article 626 gives the debtor 30 days from becoming insolvent or over-indebted to ask for proceedings. For a company, the management body, representative or liquidator makes the filing; a procurator has a separate seven-day written warning duty. Directors should record when warning signs arose, what information was obtained, and why the legal trigger was or was not met. Shareholder reluctance does not safely suspend a statutory management duty.

Proceedings may also start on a petition by a liquidator or a creditor under a commercial transaction. The National Revenue Agency may petition for the public and private state claims specified by Article 625. The General Labour Inspectorate may act where due wages to at least one third of employees remain unpaid for more than two months. A creditor petition still requires evidence of both standing and the debtor's insolvency; it is not an ordinary debt-collection shortcut.

Before either a debtor or creditor petition reaches the court, the applicant must notify the NRA under Article 78 of the Tax and Social Security Procedure Code and attach proof. The NRA insolvency-notification service confirms that the notice precedes court filing.

Prepare the Petition and Evidence

Jurisdiction lies with the district court for the trader's registered office as entered no later than six months before filing. A recent address move cannot automatically move the insolvency forum. Public case information and published decisions can be monitored through Bulgaria's Unified e-Justice Portal, while insolvency acts and invitations must also be followed in the Commercial Register.

The debtor's Article 628 package normally includes:

• the latest audited annual financial statements and audit report where required, plus a balance sheet as at filing
• an inventory and valuation of assets and liabilities
• creditor and debtor lists stating addresses, basis, amount, maturity and security
• the proposed initial date, asset carrying value, net sales and average staff data for the preceding reporting period
• NRA notification evidence, authority documents and an express power of attorney where counsel files

A creditor supplies its claim documents and the evidence relied on to establish insolvency, together with the NRA notice and fee evidence. Under Article 620, the debtor does not prepay the state fee; a petition against a commercial company is currently EUR 127.82 under the official February 2026 fee amendment. Expert evidence, translations, security for interim measures and representation are separate costs.

The filing fee is not the same as funding the proceeding. If available property cannot cover the provisional practitioner's remuneration and expected initial expenses, Article 629b lets the court set a case-specific amount for any interested person to prepay. There is no universal deposit figure.

What the Opening Decision Changes

If the test is proved, the court declares insolvency or over-indebtedness, fixes its initial date, opens proceedings, appoints a provisional insolvency practitioner, permits protective attachments or injunctions and states the claims deadline. The initial date may predate the petition and is evidence-driven; there is no general rule that automatically limits it to four years.

Opening does not invariably close the business that day. The debtor initially continues under the practitioner's supervision and needs prior consent for new transactions. The court may remove the debtor's power over the estate if creditor interests are endangered. If continued trading would plainly damage the estate, the court may instead declare insolvency and stop operations immediately or later within the statutory window.

Individual property lawsuits and enforcement against estate assets are generally stayed, subject to important statutory exceptions. Payments due to the company are received through the practitioner after registration. The opening decision, claim lists, meeting invitations and material court acts are public, so parties should monitor the Registry's insolvency reports as well as the court file.

Creditor Claims, Voting and Priority

Article 685 requires a creditor to lodge its written claim with the insolvency court, not informally with the practitioner, within one month after the opening decision is registered. The prescribed claim identifies the case, basis, amount, privilege, security, evidence and payment account, with a copy for the practitioner. A claim filed during the additional two-month period can still be examined, but the late creditor loses important procedural rights, bears added costs and cannot undo an earlier distribution. Pre-opening claims cannot be filed after that outer window.

Employee claims arising from employment and established public claims are entered ex officio by the practitioner, but affected parties should still verify the published lists. The practitioner prepares accepted and rejected lists; objections and any Article 694 claim have short, separate deadlines. Since the 2023 reform, the creditors' meeting that selects the permanent practitioner and decides the realisation method follows court approval of the accepted-claims list. Older descriptions of an automatic first meeting immediately after opening are outdated.

Security does not make a creditor independent of the collective process. Article 722 gives mortgage, pledge and specified registered enforcement security first recourse to proceeds from the secured asset. Insolvency expenses, pre-opening employee claims, public claims, post-opening operating claims and ordinary unsecured claims occupy later statutory ranks. Shortfalls within the same relevant rank are generally shared proportionately. Guarantees, third-party collateral, retention rights, set-off and post-opening finance require separate analysis.

Rescue, Realisation and Avoidance Risk

There are two different rescue stages. Stabilisation under Article 761 is a pre-insolvency route for a trader not yet insolvent but facing an immediate danger within the forward-looking statutory test and capable of continuing. Only the trader initiates it. Once insolvency is established, a recovery plan may instead be proposed by the eligible debtor, practitioner, creditor, owner or employee constituencies within the Commercial Act deadlines. It can reschedule or reduce claims, reorganise operations, convert debt or sell the whole or part of the business, but must show treatment by class, implementation safeguards and the effect on employment.

If no admissible plan is proposed or confirmed, the practitioner realises estate assets under creditor and court control and distributes proceeds by statutory rank. Neither a plan nor final distribution has a reliable fixed timetable. Valuation disputes, title, litigation, foreign assets, tax and appeals can extend the case materially.

Transactions before filing are not insulated merely because they were completed. Articles 646 and 647 permit specified payments, new security, gratuitous or unequal transactions and related-party dealings within different look-back periods to be attacked for the estate. The initial insolvency date affects some tests. Management should preserve ledgers, email, bank data, contracts and valuation evidence and avoid selective, connected or out-of-course transfers without specialist review.

Employees, Managers and No-Asset Cases

Employment duties continue alongside insolvency. Employees have a statutory priority for qualifying claims and may also be eligible for the state guaranteed- receivables scheme. The current NSSI guidance sets eligibility rules and a three-month employee application period from registration of the relevant opening decision. Employer notices, payroll records, terminations and social-security reporting still need active handling.

Late filing creates personal risk. Article 627 makes the responsible persons jointly liable to creditors for loss caused by delay. Article 620a also requires management facing imminent insolvency to take necessary preventive action, consider stakeholders and avoid deliberately or grossly negligently jeopardising viability. Criminal Code Article 227b separately addresses failure by responsible managers to seek proceedings within 30 days of cessation of payments; concealment, damaging disposals and false records can engage other offences. The official Criminal Code should be applied to the proved facts, not treated as automatic guilt whenever a business fails.

If assets cannot fund initial expenses and nobody prepays the amount set by the court, Article 632 requires an opening, declaration of insolvency, cessation and stay—but not immediate deletion. The debtor or a creditor has one year from registration to seek resumption by showing sufficient assets or depositing the required amount. Only if that does not happen does the court terminate the case and order deletion. This is not a private shortcut around employee, archive or management duties.

Foreign Elements, Sole Traders and Liquidation

For EU cross-border cases, jurisdiction is governed by Regulation (EU) 2015/848. Main proceedings generally belong where the debtor's centre of main interests is located; a company's registered office is rebuttably presumed to be that place if it was not moved to another Member State during the preceding three months. Secondary proceedings may be possible where the debtor has an establishment. Foreign assets, employees, security and parallel proceedings need coordinated advice before filing.

A sole trader is not a limited-liability company. Commercial insolvency may apply even after an ET's deletion, within Article 611's conditions and one-year period, and parts of personal or matrimonial property can enter the estate. Do not promise an individual debt discharge or copy corporate outcomes onto an ET without specific advice.

Voluntary liquidation is likewise unavailable as a way to sidestep insolvency. If insolvency appears during liquidation, the liquidator must address the filing duty; opening insolvency suspends the voluntary process and the final opening decision terminates it. Compare our standard company liquidation guide and our manager duties guide.

Lion Consult can coordinate the trigger assessment, NRA notice, petition evidence, creditor strategy, interim protection, claim filing, employment steps and cross-border work with accountants and insolvency specialists. Discuss an insolvency matter with our team.

Insolvency deadlines run from legally defined events and public registrations. Obtain Bulgarian legal, insolvency, tax, accounting and employment advice before delaying a petition, paying selected creditors, disposing of assets, filing a claim or relying on a rescue or no-asset route.

Frequently Asked Questions

What tests open company insolvency in Bulgaria?

Inability to meet a qualifying due obligation; for a company covered by the balance-sheet test, over-indebtedness where property is insufficient for liabilities.

When must management file?

Within 30 days after insolvency or over-indebtedness occurs; the fact-specific trigger may precede zero cash.

Which court is competent?

The district court for the registered office entered no later than six months before filing.

How does a creditor file a claim?

In writing with the insolvency court within one month of registration; only a restricted two-month late window follows.

Does opening stop the business?

Not automatically. Operations initially continue under supervision, but the court can transfer control or order cessation where the estate is endangered.

What if the company has no assets for expenses?

Article 632 opens and stays the case, with a one-year resumption window; deletion follows only if nobody resumes it.

Can a solvent company choose insolvency instead of liquidation?

No. Voluntary liquidation is the ordinary solvent route; if insolvency appears, the liquidator must address the filing duty.