site.btaCorpbank Trustees Recover from Debtors 40 Per Cent of Failed Bank's Assets

Corpbank Trustees Recover from Debtors 40 Per Cent of Failed Bank's Assets

Sofia, February 24 (BTA) - The trustees in bankruptcy of the failed Corporate Commercial Bank (Corpbank) have recovered from debtors some 600 million leva, equivalent to more than 40 per cent of the 1,378 million leva worth of the bank's assets by the date of its adjudication in bankruptcy, April 22, 2015, the trustees said in a press release on Friday.

Some 13 per cent of the bank's loan portfolio is secured by valid collaterals. While the bank was under conservatorship, some 850 million leva were accounted for as offset by secured borrowers against deposits they had purchased at discount from large depositors with amounts in excess of the State guarantee. As a result, a number of collaterals were released, eroding Corpbank's bankruptcy estate. This made the situation even worse and impeded recovery, the trustees pointed out. Debtors did not repay their loans and did not return the assets they had acquired and explored every avenue to avoid this.

The trustees say they had filed over 1,100 lawsuits against legal persons for detriment inflicted on the bank, as well as against auditor KPMG Bulgaria, which certified the bank's accounts in the years preceding its failure.

The Commission on Unlawfully Acquired Asset Forfeiture has laid a huge claim against Tzvetan Vassilev (whose Sofia-based Bromak was the majority shareholder in Corpbank, with a 50.7 per cent stake), and if the Commission wins the case, it is legally possible to transfer part of the forfeited property to the bankruptcy estate and thus achieve "a socially fair result: indemnifying the bank's creditors from the assets of the person who caused the worst damage to Corpbank," the press release says. The reference is to Vassilev's property valued at 1,428,097,218 leva, claimed by the Commission in March 2016.

Corpbank suspended all operations on June 21, 2014 after a run by depositors left it illiquid, and it was placed by the Bulgarian National Bank (BNB) under conservatorship on the same day. The BNB Governing Council withdrew Corpbank's banking licence, effective November 6, 2014, when it found that the bank's own funds amounted to minus 3,700 million leva and its assets were impaired by 4,222 million leva. On April 22, 2015, the Sofia City Court adjudicated Corpbank bankrupt and set its initial insolvency date at November 6, 2014. The prosecution, the BNB, and the bank's trustees in bankruptcy and shareholders challenged that date, demanding that it be changed to September 30, 2014, when an audit report found that the bank had negative own funds.