BULGARIA Law and Practice Contributed by: Nikolay Cvetanov, Boris Lazarov, Asen Apostolov and Patrizia Foffo, Penkov, Markov & Partners
The bank insolvency regulations explicitly pro - hibit the participants in the procedure to propose or execute a recovery plan with respect to the particular bank. However, the Recovery and the Resolution of Credit Institutions and Investment Intermediaries Act provides for multiple coercive administrative measures, which, however, are more of a preventive nature, including conclu - sion of an intra-group financial support agree - ment, appointment of an extraordinary governor, etc. The insolvency proceeding is considered fin - ished once all of the liabilities of the bank have been settled or the insolvency mass has been depleted. Bulgaria has implemented some of the FSB Key Attributes of Effective Resolution Regimes. Fol - lowing the failure of one of the country’s larg - est banks in 2014, Bulgaria undertook many amendments to its legislative framework, both implementing principles from those of the FSB and improving its legal framework and synchro - nisation with EU law, with a view to applying for the Eurozone. This process is now finalised, with the adoption of the whole package of legisla - tive measures in this respect and the country’s accession to the Eurozone expected in 2025– 2026. The country is striving to improve its legal system in this regard. A depositor – natural person or micro, small or medium enterprise which has a deposit exceed - ing the guaranteed amount (see Deposit Guar- antee Scheme (DGS) ), is part of the privileged creditors in the insolvency, whereas this creditor is entitled to participate in the fifth order of satis - faction – after the claims secured by pledge and mortgage; claims for which a lien is exercised; claims of the competent authorities arising out of bankruptcy costs incurred and claims for
which the BDIF has subrogated. The depositors, whose deposits are not guaranteed by the BDIF, are entitled to claim their receivables in the sixth (out of 18) satisfaction order. No other preference rules, applicable to depos - its, are envisaged in the Bulgarian legislation.
9. ESG 9.1 ESG Requirements Highlights
In general, the transposing of the Corporate Sustainability Reporting Directive (CSRD) in Bulgaria could be distinguished by the follow - ing highlights: • Bulgarian legislation is stringently aligned with the CSRD, without substantial gold plating; • the applicable sustainability reporting stand - ards are (for the time being without further transposition) the ESRS adopted with Del - egated Regulation (ЕС) 2023/2772; • the sanctions for not preparing a sustain - ability report or for preparing an incomplete/ untruthful report are synonymous with those provided for financial reporting; • the sustainability reports shall be audited by independent financial auditors (IFRS experts), and currently there is no prospected involve - ment of other specialists (environmental, legal, HR, etc); and • the first reporting period for most Bulgarian banks (having over 500 employees) is 2024. Local Legal Framework of the ESG The transposition of the CSRD in Bulgaria is effected by way of amendments in the Bulgarian Accountancy Act (AA) and the Act on Independ - ent Financial Audit effective as of July 2024.
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