Written and reviewed by Adriana Melnikliyska, Attorney-at-law, Blagoevgrad Bar No. 1900000227. Last reviewed 27 September 2026.Who this page is for
This page is for creditors owed money by a Bulgarian company that cannot or will not pay, for company directors and managers who need to understand their personal exposure when a company becomes unable to meet its obligations, and for a company itself — or its owners — facing the question of whether it has reached the point where Bulgarian insolvency law applies. It is written for people who need to understand a genuinely contested or distressed situation, not a straightforward, solvent wind-down.
It is not written for a company that is solvent and simply wants to stop trading and close in an orderly way — that is a voluntary liquidation, a different and considerably simpler procedure, described in the comparison further down this page.
What Bulgarian insolvency proceedings involve
Insolvency proceedings under the Commerce Act are opened by the competent district court, on a petition filed by the debtor company itself, by a creditor, or, in limited defined circumstances, by another eligible party. The court examines whether the company meets the legal test for insolvency — broadly, an inability to meet due, enforceable monetary obligations, or, for certain companies, an excess of liabilities over assets — and, if satisfied, opens proceedings and appoints an insolvency trustee (синдик) to take over management of the company's affairs from that point.
Once proceedings open, individual enforcement action by creditors against the company is generally stayed, and claims are instead brought and resolved collectively within the insolvency process itself. In broad outline, the process then moves through: verification of the company's assets and financial position; the trustee compiling and publishing lists of accepted and contested creditor claims; a creditors' meeting, which has defined powers including electing a creditors' committee and, in some cases, deciding on a reorganisation plan as an alternative to liquidation of the company's assets; and, ultimately, either a court-approved reorganisation or the sale of the company's assets and distribution of the proceeds to creditors in the order of priority the Commerce Act sets, followed by the company's deregistration.
How long this takes, and what a creditor actually recovers, depends entirely on the company's real financial position, the number and size of competing claims, and how contested the case is — none of which can be estimated reliably before the company's actual position is examined.
Filing and defending a creditor's claim in insolvency
A creditor who is owed money by a company that has entered, or may need to enter, insolvency proceedings faces a different task from an ordinary debt-collection matter: instead of suing the debtor individually, the creditor generally needs to submit its claim within the insolvency proceedings themselves, within the deadlines the trustee and the court set for doing so, and be prepared for that claim to be examined, and potentially disputed, by the trustee or by other creditors. Claims are ranked by the Commerce Act into a defined order of priority — broadly, secured claims against specific assets, certain employee and social-insurance claims, tax and other public claims, and general unsecured claims — and where a claim sits in that order materially affects what, if anything, is actually recovered once the company's assets are distributed.
This practice reviews the underlying debt and supporting documents, prepares and submits a creditor's claim within an open insolvency case, and, where a claim is contested by the trustee or another creditor, represents the creditor in that dispute before the insolvency court. Where a debtor company has not yet entered formal insolvency but shows clear signs of financial distress — missed payments, other creditors already litigating, a materially deteriorating position — an early assessment of whether to petition for the company's insolvency, negotiate directly, or pursue an ordinary debt claim first is itself part of the value this practice can add before matters are entirely out of the creditor's hands.
Director liability questions
A recurring and genuinely high-stakes question for the managers and directors of a Bulgarian company is personal liability once the company becomes unable to pay its debts. The Commerce Act imposes an obligation on a company's management to file an insolvency petition within a defined period once the statutory insolvency test is met, rather than continuing to trade, incur new debt, or make selective payments as if nothing had changed. A director or manager who fails to file in time, or who takes steps that worsen the position of creditors after the point insolvency should have been recognised, can face personal liability for damage caused to creditors as a result — a materially different and more serious exposure than the ordinary limited liability a company director otherwise enjoys.
Assessing this kind of exposure means establishing, on the actual facts, when the company's financial position in fact met the statutory insolvency test, what the management knew or should reasonably have known at that point, and what decisions were taken afterwards. This is not a question that can be answered from a general description of a company's difficulties — it depends on the company's accounts, the timing of specific payments and decisions, and the exact wording of the current Commerce Act provisions on management liability, which should be verified rather than assumed.
How this differs from a voluntary company closure
A large share of what gets searched under “closing a Bulgarian company” is, correctly, a solvent voluntary liquidation — the company has no disputed debts it cannot pay, its owners simply want to stop trading, and the process is an administrative wind-down: appointing a liquidator, settling known liabilities, distributing any remaining assets to shareholders, and deregistering the company. That is an operational service, handled well by a business-services provider such as Bulgarian.LLC, and this practice does not compete with that kind of provider for a clean, undisputed closure.
Insolvency is a different and genuinely legal scenario: the company cannot pay what it owes, one or more creditors are not being satisfied voluntarily, and the process is court-supervised, collective, and capable of producing personal consequences for directors that a voluntary liquidation does not. The table below sets out the practical difference.
| Situation | Voluntary liquidation (operational) | Insolvency proceedings (legal) |
|---|---|---|
| Can the company pay its known debts? | Yes — that is the defining feature | No, or there is a genuine dispute about whether it can |
| Who controls the process? | The shareholders, through an appointed liquidator | The court and a court-appointed insolvency trustee |
| Are creditors' claims contested? | Not normally — known liabilities are simply paid | Often, and claims are examined and ranked by priority |
| Can a director face personal liability? | Not typically, if the closure genuinely reflects solvency | Yes, in defined circumstances around late filing or worsening creditor positions |
| Who typically handles it? | A business-services provider (e.g. Bulgarian.LLC) | An attorney, given the court process and liability exposure |
Where it is genuinely unclear which situation a company is actually in — a common position for a company with some disputed debts but not an obviously hopeless financial position — that question is itself the first thing this practice will assess, honestly, rather than assuming insolvency (or assuming it can be avoided) without looking at the company's actual figures.
Cross-border creditors and assets
Where a creditor is based outside Bulgaria, or a Bulgarian insolvency involves assets or proceedings in more than one EU member state, Regulation (EU) 2015/848 on insolvency proceedings governs which member state's courts have jurisdiction to open the main proceedings and how proceedings and claims are recognised across borders within the EU. This is relevant both to a foreign creditor deciding how to submit a claim in a Bulgarian insolvency, and to a Bulgarian company or creditor dealing with insolvency proceedings already opened in another member state. Outside the EU framework, recognition of a non-EU insolvency proceeding, or enforcement of a claim against assets located outside Bulgaria, follows a different and more case-specific analysis.
What happens to contracts, employees and ongoing business during proceedings
Insolvency does not automatically end every contract or employment relationship the company was party to, and it does not automatically stop the business from trading. Whether the company continues to operate during proceedings, in whole or in part, is a decision for the trustee and the court, guided by whether continued trading is likely to preserve or increase value for creditors, or simply run up further losses at their expense. Existing supply and customer contracts can, depending on their terms and the trustee's decisions, be continued, renegotiated, or terminated as part of the proceedings, and a counterparty dealing with a company it knows or suspects to be in insolvency should check the trustee's actual authority before assuming a contract signed with the company's previous management still binds it in the same way.
Employees of an insolvent company retain a defined, and in practice fairly strong, priority for unpaid wages and related claims within the insolvency's order of distribution, reflecting the general policy of protecting employees from bearing the employer's financial failure. Where a company genuinely cannot continue and redundancies follow, the ordinary Labour Code rules on lawful termination still apply, layered on top of the insolvency-specific priority given to the resulting wage and severance claims — a point relevant both to affected employees and to the trustee administering the process.
How an insolvency matter is assessed
An insolvency enquiry — whether from a creditor, a director, or a company itself — begins the same way as any other matter this practice takes on: a written description of the situation and the documents already available, a conflict check, and, if the matter can be taken forward, a written scope setting out exactly what work will be done and the applicable fee, agreed before substantive work begins. For a creditor, that typically means an early view on whether the debtor is (or is likely to become) formally insolvent, and on the realistic prospects of recovery given the debtor's apparent asset position, before deciding whether to petition, submit a claim in an existing case, or pursue payment by another route. For a director, it means establishing the company's actual financial timeline and the decisions taken at each point, so that any exposure can be assessed honestly rather than guessed at.
Documents that matter at the assessment stage
- For a creditor: the underlying contract or invoice, evidence of the debt and any part-payment, and anything showing the debtor's financial difficulty — other unpaid creditors, existing court proceedings, a public notice of insolvency proceedings if one already exists.
- For a director or manager: the company's recent annual accounts and management accounts, records of payments made and liabilities incurred over the relevant period, and any board or shareholder decisions taken as the company's position changed.
- For a company assessing its own position: the same financial records, plus a list of known creditors and their claims.
- The Commercial Register entry for the company in question, showing its current status, registered representatives and any existing insolvency filing.
Sending what already exists, even an incomplete set of records, is normally the fastest way to get a useful initial view. Nothing sensitive should be sent before the secure submission route is confirmed.
Fees
Insolvency and director-liability matters are not fixed by a public price list, because a single creditor-claim filing is a different piece of work from representation through a contested, multi-creditor insolvency case or a liability investigation spanning several years of accounts. The professional fee, and any expected third-party costs such as court fees or expert accounting review, are set out in writing as part of the proposed scope, before any work begins — see how fees are set. There is no default consultation fee published on this page, and no promise of a free initial call.
What this practice does not do
To be direct about the limits of this service: this practice does not act as an insolvency trustee (a court-appointed, separately regulated role), does not handle a solvent, undisputed voluntary liquidation (an operational service, described above), does not promise or predict the outcome of an insolvency case or a director-liability question, and does not offer a free consultation or a same-day guarantee. Where a matter is genuinely a clean voluntary closure rather than an insolvency question, that is said plainly, with a suggestion to approach a business-services provider set up for that work.
Frequently asked questions
How do I know if a Bulgarian debtor is actually insolvent, or just slow to pay?
The Commerce Act sets a specific legal test — broadly, an inability to meet due, enforceable obligations, or, for some companies, liabilities exceeding assets — rather than simply being late on a single payment. A public insolvency filing, other creditors already suing, or a pattern of unpaid debts are indicators worth checking, but the legal test itself is assessed against the debtor's actual financial position.
Can I still sue a Bulgarian company individually once insolvency proceedings have opened?
Generally no. Once proceedings open, individual enforcement action is typically stayed, and creditors instead submit their claims within the insolvency proceedings themselves, within the deadlines the trustee and court set.
What happens to my claim if the trustee or another creditor disputes it?
A contested claim is examined by the insolvency court, generally after the trustee has listed it as disputed rather than accepted. Representing a creditor in that examination, with the supporting evidence for the underlying debt, is part of what this practice does.
Can a director be held personally liable for a Bulgarian company's debts?
Not simply because the company cannot pay — limited liability remains the general rule. Personal liability can arise in defined circumstances, principally around failing to file an insolvency petition in time once the statutory test is met, or taking steps afterwards that worsen creditors' position. Whether that applies depends on the company's actual financial timeline and the decisions taken.
Is closing an insolvent company the same as a normal liquidation?
No. A voluntary liquidation assumes the company can pay what it owes and is simply an administrative wind-down. Where the company cannot pay its debts, or a creditor disputes that it can, the correct route is insolvency proceedings, a court-supervised process with different rules and different consequences for directors.
How long does a Bulgarian insolvency case take?
There is no fixed timeline. It depends on the size and complexity of the company's assets and liabilities, how many creditors and claims are involved, and whether a reorganisation plan is proposed instead of liquidation of the assets. No timeline is promised before the company's actual position is known.
What is the priority order for creditors in a Bulgarian insolvency?
The Commerce Act sets a defined order — broadly, secured claims against specific assets first, then certain employee and social-insurance claims and public claims, then general unsecured claims. Where a specific claim ranks needs to be checked against its actual nature and the current text of the Act.
Do you act as the insolvency trustee?
No. The trustee (синдик) is a court-appointed, separately regulated role. This practice represents creditors, directors, or companies as parties within the proceedings, not as the trustee administering them.
I am a foreign creditor owed money by a Bulgarian company — can you act for me?
Yes. A foreign creditor can submit a claim in a Bulgarian insolvency in the same way as a domestic one, and, where the matter involves proceedings or assets in more than one EU member state, EU insolvency rules on jurisdiction and recognition are considered as part of the assessment.
What if I am a director and I am not sure whether my company has already reached the insolvency threshold?
That uncertainty is itself a reason to seek an assessment promptly rather than wait — the filing obligation, and the liability risk for missing it, runs from the point the statutory test is actually met, not from the point it becomes obvious to everyone involved. An early review of the company's current accounts is the starting point.
Can insolvency proceedings end in the company continuing to trade, rather than being wound up?
In some cases, yes — the Commerce Act allows for a court-approved reorganisation plan as an alternative to liquidating the company's assets, where creditors and the court agree to it. Whether that is realistic depends entirely on the company's actual prospects and the creditors' willingness to accept a plan.
What happens to employees if a Bulgarian employer becomes insolvent?
Unpaid wages and related employee claims receive a defined priority within the insolvency's order of distribution, ahead of most other unsecured claims. If the company cannot continue and redundancies follow, the ordinary Labour Code rules on lawful termination still apply on top of that priority.
Do existing supplier or customer contracts automatically end when a company enters insolvency?
No, not automatically. Whether a specific contract continues, is renegotiated, or is terminated depends on its own terms and on decisions taken by the trustee, guided by whether continuing it preserves value for creditors. A counterparty should confirm the trustee's position before assuming a pre-insolvency contract still applies unchanged.
Is there a free consultation before you take on an insolvency matter?
No. The written case-assessment described on this page, where the debtor's or company's actual position is reviewed and a scope and fee are proposed, is itself the paid product offered rather than a free preliminary call.
Can a director face criminal exposure, not just civil liability, for filing an insolvency petition late?
Late filing can, in defined circumstances, carry consequences beyond the civil liability to creditors described above, depending on how long the delay was and what happened during it. Whether a specific situation raises that kind of exposure is a fact-specific question that needs its own review, not something to assume either way from a general description.
If the debtor company already shows signs of financial distress but has not filed for insolvency, should a creditor wait or act now?
Waiting is rarely the safer option. Once formal insolvency proceedings open, an individual creditor loses the ability to pursue the debtor separately and must instead submit a claim within the collective process, in competition with other creditors. An early assessment of the debtor's actual position is what allows a creditor to decide, while there is still a choice to make, whether to press for payment now or prepare to file a claim in an insolvency that looks likely regardless.
Primary sources
Article numbers, filing deadlines and priority rules should always be verified against the consolidated text in force at the time of a specific matter.
- Commerce Act (Bulgaria) — Part Four, insolvency proceedings →
- Civil Procedure Code (Bulgaria) →
- Regulation (EU) 2015/848 — insolvency proceedings →
- Bulgarian Bar Act (Zakon za advokaturata) →
- Code of Ethics for Attorneys →
This page describes the general structure of Bulgarian insolvency proceedings and how a matter is assessed. It does not state whether a specific company is insolvent, whether a specific director faces liability, or predict the outcome of a specific case, which depend on the actual facts and financial records and must be confirmed once a matter is reviewed.