How to Close a Company in Bulgaria: The Liquidation Process

The process of closing a company in Bulgaria is formally referred to as ‘liquidation’. Governed by the Company Act, this procedure outlines all the necessary steps and requirements for effective liquidation. During this process, creditors are given a six-month window from the initiation of the liquidation to present their claims. Following this period, the company is officially removed from the Commercial Register.

For expert assistance in navigating the liquidation of a Bulgarian company, our Legal500 recommended team is available for consultation.

Key Steps in the Liquidation of a Bulgarian Company

The liquidation commences with a shareholder resolution to cease operations and appoint a liquidator. The critical activities during the six-month liquidation period include:

1. Finalizing ongoing transactions.
2. Liquidating company assets.
3. Settling creditor claims.
4. Distributing any remaining assets among shareholders.

Eligibility for Appointment as a Company Liquidator

Typically, the role of a company liquidator is assumed by the company’s director. However, the shareholders have the flexibility to appoint any other individual to fulfill the duties of a liquidator. This allows for greater choice in selecting someone with the specific expertise, experience, or qualifications deemed necessary for the effective and compliant execution of the liquidation process.

Branch vs. Subsidiary Liquidation in Bulgaria

• Branch Liquidation: The process of dissolving and liquidating a branch in Bulgaria is remarkably quick and efficient, typically completed within just a few days.
• Subsidiary Liquidation: This follows the standard procedure, akin to that of a private limited company, and may take up to 9 months. Unique steps are involved if the parent company no longer exists, where the liquidation is initiated through the public prosecutor’s office.

Liquidation vs. Insolvency

• Liquidation is a voluntary process initiated by the company’s shareholders, focusing on protecting the debtor’s interests.
• Insolvency is court-ordered, prioritizing creditor interests. Both aim to satisfy creditors through asset liquidation.

For those considering alternatives to liquidation, we also offer guidance on insolvency proceedings in Bulgaria.

Deregistration of Freelancers and Foundations

• Freelancer Deregistration: This is a straightforward process aimed at concluding self-employment, usually resolved within weeks.
• Foundation Dissolution: This mirrors the liquidation process of a limited company in terms of timeframe and documentation requirements.

Strategic Considerations for Liquidation

When you initiate the liquidation of a company, it automatically triggers a tax audit. To circumvent potential issues arising from past liabilities, a strategic approach would be to consider delaying the liquidation process.

Can Liquidation Be Halted?

Yes, the liquidation process can be stopped any time before the final dissolution of the company.

For detailed guidance on company liquidation in Bulgaria, we encourage you to reach out to us.