- Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
- Which medium-to long-term stabilisation measures are in place in your jurisdiction?
- Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
- Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
- Which prerequisites are necessary to qualify for a programme?
- Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
- In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
- Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
- How are insolvency application deadlines handled in times of Corona?
- How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
- Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
- Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
jurisdiction
1. Which financial (not tax or labour) short-term compensation schemes for immediate losses due to social distancing measures have been implemented? For which industries/sizes of business?
According to a decision of the Bulgarian Parliament dated 13 March 2020, a state of emergency was declared for the period 13 March – 13 April 2020 with the possibility of further extension.
The National Assembly adopted on the 23 March 2020 the measures during the State of Emergency Act.
One of the key short-term provisions of the Act concerns the regime for utilisation of unutilised funds under EU cohesion programmes as an emergency fund for the fight against COVID-19. This was granted by the EU Commission as an immediate stopgap measure.
2. Which medium-to long-term stabilisation measures are in place in your jurisdiction?
On 19 March 2020 the Bulgarian National Bank (BNB) issued a press release announcing a set of measures in relation to COVID-19 pandemic. The BNB applied a package of measures aiming to mitigate the negative effects resulting from restrictions in relation to the COVID-19 for citizens and companies. The goal is to simultaneously preserve the stability of the banking system and strengthen its flexibility.
The three main pillars of the decision are the following:
- full capitalisation of the retained earnings in the banking system (effect of appx. EUR 800m)
- reduction of the anticyclical buffer: The Governing council of BNB, taking into consideration such a radical shift in the environment in comparison to the assessment a year ago and with regard to the dynamic environment both domestically and internationally decided that the level of the countercyclical buffer applicable to credit risk exposures in the Republic of Bulgaria shall remain 0.5% as compared to the targeted 1,5 % increase by year end (effect of appx. EUR 350m).
- increase of the liquidity in the system by reduction to foreign exposures of banks i.e. the reduction of foreign deposits and investments in non-Bulgarian government bonds of Bulgarian banks. The measure is aimed at foreign owned local banks (which hold at least 60% of the assets in the Bulgarian banking system) and has as an end result the depositing of appx. EUR 3,5bn with the BNB.
Further, the Bulgarian Development Bank (the “BDB”), the Bulgarian state-owned development bank, will receive an equity increase of around EUR 250m equity from the Bulgarian Ministry of Economy, as its main shareholder, in the upcoming days.
3. Which measures (Guarantees, Loans, Equity Injections, etc.) are available?
The new equity will be used by the BDB for two products:
- portfolio guarantees to banks;
- equity investment in companies;
The terms and conditions of the programme are still not public and subject to fine tuning that should be clarified in the upcoming weeks.
4. Have these mid- to long-term stabilisation measures already been notified with EU or other antitrust bodies?
Other.
Comments
The current measures are not subject to notification with the EU.
5. Which prerequisites are necessary to qualify for a programme?
N/A
6. Are there any major reasons that may inhibit an applicant from successfully applying for a stabilisation measure?
Other.
Comments
N/A
7. In an international context, are subsidiaries and branches of foreign parent/holding companies eligible to apply? For EU-States: Also for non-EU-third countries?
Other.
Comments
N/A
8. Do your country’s stabilisation schemes foresee restrictions on use of cash/other restrictions?
Other.
Comments
The effect of the opening of the stabilisation procedure is that a merchant is restricted in its operations either partially (i.e. they could be carried under the supervision of the trusted party) or fully, when the merchant is divested of its rights to manage and dispose of its assets. The opening of the proceedings also imposes a ban over the merchant to repay debts that occurred prior to the date of the application and have not been paid on the maturity date, except for public payments .
The stabilization procedure under Bulgarian law foresees the adoption of court approved stabilisation plan.
The stabilisation plan should provide for at least 50% repayment of liabilities for all creditors and may not provide for extension of repayment terms by more than three years. The plan may propose selling of separate assets, of the going concern, parts of it, or debt to equity conversions.
9. How are insolvency application deadlines handled in times of Corona?
No insolvency/stabilisation applications are available during the state of emergency. Nevertheless, the terms under all substantive law provisions are applicable which is important in the context of hardening periods, insolvency set-off and other substantive provisions of the Bulgarian insolvency laws.
10. How far have local insolvency/restructuring laws been changed/eased which might have an impact on international businesses?
No changes for now. Only the insolvency “holiday” described under the previous question.
11. Are there any particular Corona-related rules on cross-border insolvencies and restructurings in place in your country?
Other.
Comments
N/A
12. Which restructuring/insolvency measures instead of a wind down are available for Corona-related restructurings of entities with an international design or background in your country?
N/A
