site.bta Bank Bankruptcy Act Amended Conclusively to Regulate Appointment of Temporary Trustees

Bank Bankruptcy Act Amended Conclusively to Regulate Appointment of Temporary Trustees

Sofia, March 18 (BTA) - Approving amendments to the Bank
Bankruptcy Act on second reading Wednesday, the National
Assembly resolved that before a lawcourt decides whether to open
 a bankruptcy procedure against a delicensed bank, it will
appoint a temporary trustee in bankruptcy to the bank if
financial conservators took charge of the bank before it lost
its licence. As soon as the temporary trustee in bankruptcy is
appointed, the financial conservators will lose their powers.

Under the amendments, a temporary trustee in bankruptcy will be
proposed by the Bulgarian Deposit Insurance Fund (BDIF). The
trustee will be authorized to represent the delicensed bank, to
manage its current affairs, to protect, increase and run its
assets, to seek them out and identify them, and to request the
termination, breaking or invalidation of deals to which the bank
 is a party. The trustee may hire persons with experience in
international bank bankruptcy investigations who will trace
assets of the bank which have been illegally disposed of and
will recommend ways to protect and recover those assets.

The temporary trustee in bankruptcy will report to BDIF and the
Minister of Finance on a weekly basis. BDIF will post the
reports on its website, the lawmakers resolved.

During the debate on the amendments, Chavdar Georgiev (BSP-Left
Bulgaria) said that this is essentially an extraordinary law.
Georgiev said this particular law will not solve all problems.
The real issue is about the general practice of appointing
trustees in bankruptcy, he said. "We expect an avalanche of
lawsuits which will only delay some asset recovery proceedings,"
 he warned.

Peter Slavov (Reformist Bloc) said the law is not extraordinary
because it does not create retroactive obligations that cannot
be fulfilled.

Emil Dimitrov (Patriotic Front) said the amendments may not be
the best way to address the situation, but they are the only
possible way.

According to Nikolai Alexandrov (Ataka), trustees in bankruptcy
should be elected by the National Assembly in order to ensure
greater transparency in their work. Danail Kirilov (GERB)
responded by saying that temporary trustees in bankruptcy will
be controlled by the courts, which will also oversee the entire
process.

Yordan Tsonev (Movement for Rights and Freedoms) noted that BDIF
 is not a regulatory authority.