Sofia court to rule on CCB insolvency ‘within seven days’

Written by on April 15, 2015 in Bulgaria - Comments Off on Sofia court to rule on CCB insolvency ‘within seven days’

Sofia City Court held a hearing in the insolvency case against Corporate Commercial Bank (CCB) on April 15 and was expected to issue a ruling “within seven days”, reports in Bulgarian media quoting court officials said. The three-hour hearing was not open to the public, after CCB interim receivers and the state deposit guarantee fund objected to the motion.

Presiding judge Ivo Dachev was expected to issue a ruling at the start of next week, specialist judiciary news website Legalworld.bg reported. If he declares the bank insolvent, as it is widely expected, his next step will be to notify the deposit guarantee fund, which will have to appoint permanent bankruptcy receivers to replace the interim ones.

Afterwards, creditors will have two months to submit their claims, followed by two weeks during which creditors that did not have their claims accepted will be able to lodge their objections. If creditors cannot reach common ground with the bankruptcy receivers, the former could lodge lawsuits, which could take up to year to resolve, delaying the liquidation process of CCB assets, Legalworld.bg said.

A key part any insolvency ruling will be the date on which the bank is declared insolvent, the report said.

The insolvency proceedings against CCB were opened in November 2014, after the central bank revoked the lender’s banking licence, but had to be suspended as shareholders appealed the central bank’s decision. The proceedings are being resumed after the Supreme Administrative Court ruled on April 2 to reject the appeal, arguing that shareholders did not have the direct legal interest to justify litigation.

Insolvency proceedings were the latest development in the saga surrounding the bank, which was Bulgaria’s fourth-largest lender by assets at the point it was put into conservatorship by the BNB on June 20 2014 following a bank run on deposits, with administrators appointed by the central bank took over the management from CCB’s board of directors (until they were replaced by interim bankruptcy receivers in late March).

CCB and its majority shareholder Vassilev have been alleged, over the years, of enjoying inordinate support from several Bulgarian governments and attracting the bulk of corporate deposits by large state-owned companies. It has also been alleged that Vassilev used loans given by the bank to companies he controlled to invest in various industries, including telecoms and media.

He is also under investigation on charges of embezzling 206 million leva from the bank, which he denies, and is currently in Serbia, where he is fighting an extradition request lodged by Bulgarian authorities.

After auditors last year recommended writing down about 4.2 billion leva of impaired assets, the main question facing the Cabinet is recouping as much money as possible from CCB after the government was forced to lend two billion leva to the deposit guarantee fund to pay out all guaranteed deposits in the bank.

(For full coverage of the CCB situation from The Sofia Globe, click here. Photo of shuttered CCB branch in Sofia’s Lozenets borough: Alex Bivol)

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