The Legal 500

Bulgaria by Yordan Naydenov & Nikolay Kolev BOYANOV & CO

OVERVIEW OF M&A ACTIVITY
In the course of 2010 the domestic M&A market was seriously affected by the world financial crisis. The transaction volume was at its levels from 2007.

The economic crisis has brought about an avalanche of bankruptcies of an ever increasing number of small, medium and large commercial entities in all economic sectors. Insolvency, for its part, has evolved and turned from an almost extraordinary ground for suspension of economic activities into a phenomenon competing with the voluntary liquidation of companies.

Largely as a manifestation of the freedom of movement of capital across the EU, but also as an effect of globalization and the operation of trans-national companies in need of flexible financing, such financing is relatively frequently obtained centrally by the relevant company. At the same time, its subsidiaries in individual countries also get some access to the financing thus obtained, with their local assets serving as a security or collateral.

With effect from 1 January 2011 several amendments to the law in Bulgaria were made that aim to enhance the position of secured creditors, in particular in insolvency and avoid certain pitfalls in the rules before that.

After the latest changes in the Bulgarian financial legislation and, in particular, the Credit Institutions Act, and the issuing by the BNB of Ordinance No. 26 of 23 April 2009 on Financial Institutions (the Ordinance), the providers of financial services passed into a more complicated registration regime.

It would be difficult to identify a universally accepted definition of “trust” and “security trustee” although these legal concepts appear to be well-developed in common law systems and are also acknowledged in a few civil law jurisdictions. Probably one of the most recognized and internationally supported definition of “trust” is provided by the Convention on the Law Applicable to Trusts and on their Recognition (the “Trusts Convention”). It refers to the term "trust" as “the legal relationships created - inter vivos or on death - by a person, the settlor, when assets have been placed under the control of a trustee for the benefit of a beneficiary or for a specified purpose”.

The Council of Ministers of the Republic of Bulgaria has recently submitted to the Parliament a new Draft Law on the Consumer Credit. The draft adopts the requirements of Directive 2008/48/EC of the European Parliament and of the Council of 23 April 2008 on credit agreements for consumers and repealing Council Directive 87/102/EEC. In general the purpose of this law is to better protect the interests of consumers upon concluding consumer credit agreements. The highlights of this draft law are the following.