The liquidation is a mandatory procedure for the closing down of an entity, performed by a specially appointed person - the liquidator. The liquidator is elected by the Company meeting. The decision to dissolve the company and the appointment of the liquidator is subject to in the commercial register. The rights and duties of the liquidator are regulated in the Bulgarian Commercial Act. I.
I. Duties and responsibilities of the liquidator
The Main functions of the liquidator are to complete all company affairs and to fulfill its obligations; to collect the receivables; to represent the company before the judicial bodies. He must then convert the remaining assets in money for the satisfaction of the creditors with outstanding debts. The duties of the liquidator may be generally categorized in the following steps:
- After the announcement of the dissolution of the company, he invites all known creditor by written notice. For information of the unknown creditors he has to publish the notice in the register. The period of the invitation is six months.
- The liquidator represents and manages the company during the liquidation procedure - he has the rights and obligations of the representative and administrative boards of the company in liquidation. The liquidator does not have the right to conclude new commercial transactions. Exceptions to this principle are only allowed if these transactions have to do with the proceedings themselves - for example regarding the liquidation of the remaining assets of the company the liquidator can perform purchase agreements. The liquidator cannot make decisions for the company's transformation. This decision can only be taken by the General meeting of the Company.
- If the purchase of real estate property of the company proves to be necessary (for instance for satisfaction of a creditor, or for any other reason), the liquidator is obliged to carry out the corresponding legal actions in accordance with a special procedure.
- The liquidator is obliged to prepare a balance sheet report, which represents the financial situation of the company at the time of the liquidation. At the end of each year he prepares the documents for the annual financial statements and the annual financial report and shall submit a report on its activities as liquidator.
- If the liquidation extends to more than one year, the liquidator must convene a general meeting every year and to present its activities before it.
- With the beginning of the liquidation procedure the liquidator has to immediately inform the tax authorities in Bulgaria about the procedure.
II. Legal acts during the liquidation procedure
The liquidator has to bring to an end all pending transactions and legal processes of the company - he must:
- collect the receivables and fulfill the obligations of the Company
- terminate all contracts by mutual agreement of the parties or due to other termination grounds
- If the debt’ claims are disputed and the creditor is known, the latter must be notified in writing of the liquidation proceedings. From this moment on he has 6 months time to lodge his claims. If the creditor remains passive during this period, the amount due shall be deposited in a bank in his name.
- In cases of contested debt claims the liquidator may not distribute the assets of the company between the shareholders, unless collaterals have been deposited to those creditors.
- Liquidation of the remaining assets and distribution between associates or the shareholders. The property that remains after satisfaction of creditors shall be distributed among the shareholders. It is not necessary that this property is transformed in money. Certain objects can be transferred to one or more shareholders, unless the rights of the other shareholders and creditors are not damaged.
- The distribution of property may be made until six months have elapsed in the register since the publication of the invitation to the creditors.
- After the completion of the liquidation procedure the company must be deleted from the Commercial register. The liquidator submits the relevant documents in the commercial register.
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