site.btaParliament Amends Bank Bankruptcy Act to Suppress Asset Plundering

Sofia, January 17 (BTA) - Bulgaria's Parliament Wednesday passed on first reading a bill amending the Bank Bankruptcy Act moved by three MPs of the Movement for Rights and Freedoms (MRF): Delyan Peevski, Yordan Tsonev and Hamid Hamid. GERB, the MRF and the United Patriots voted in favour of the bill, BSP for Bulgaria voted against, and Volya abstained.

Under the draft legislation, any transfers of participating interests or shares by debtors of a bank will be void if effected after the bank is placed under special supervision, and any striking of collaterals will be declared null if done after the bank is placed under special supervision and until the monetization of its assets commences.

The conservators, official receivers and trustees in bankruptcy will be prohibited from striking any collaterals instituted in favour of a bankrupt bank. Any transfer of a receivable originating from a bankrupt bank will be unenforceable. The time limit for bankrupt bank's creditors bringing an action to set aside a bank debtor's transaction by reason of the bank's bankruptcy will be extended.

According to the movers' reasons, the idea is to establish an effective mechanism for replenishing a bankrupt bank's bankruptcy estate and to suppress schemes for plundering assets purchased directly or indirectly on money originating from such a bank.

During the debate, Rumen Gechev MP of BSP for Bulgaria argued that the Corpbank failure, on account of which the draft legislation was initiated, is a criminal case and the legislator may not oblige all taxpayers to cover "obvious corruption schemes at Corpbank and other banks". "It was you who elected the banking supervision and the trustees in bankruptcy," Gechev said, addressing the ruling majority.

Yordan Tsonev MP of the MRF denied that the purpose of the amendments is to shift the blame onto those who are not to blame.

Legal Affairs Committee Chairman Danail Kirilov MP of GERB insisted that his party should be kept out of this controversy because it was in opposition in 2014 and Corpbank was placed under special supervision by another ruling majority. Kirilov recalled that GERB drafted the first two laws imposing such restrictions.

Corpbank, then Bulgaria's fourth biggest lender, suspended all operations on June 21, 2014 after a run by depositors left it illiquid. The Bulgarian National Bank (BNB) Governing Council withdrew Corpbank's banking licence, effective November 6, 2014. The court declared the bank bankrupt on April 22, 2015. Its insolvency date was set at June 21, 2014. The bank's majority shareholder Tzvetan Vassilev and several former Corpbank executives are being tried for allegedly embezzling some 2,559 million leva from the bank. Two KPMG auditors and three former senior BNB officials (two ex-deputy governors and heads of the Banking Supervision Department and a head of team) are facing charges of malfeasance for failing to exercise control over Corpbank.