Sofia City Court rejected a request lodged by the state deposit guarantee fund to appoint an interim bankruptcy receiver at the Corporate Commercial Bank (CCB), reports in Bulgarian media said on March 12.
The request was made, reportedly, on March 11, only hours after Prime Minister Boiko Borissov said in Parliament that the Cabinet would seek such an appointment in order to prevent the “plundering of the bank”.
The court said that Bulgaria’s current law on bank insolvency did not envision the appointment of a bankruptcy receiver who would oversee the operation of bank administrators, according to reports citing court records. The ruling can be appealed within a seven-day period.
Borissov said in Parliament that the Cabinet would put forth amendments to the bank insolvency law in the coming days, but gave no further details. The bill is expected to include provisions such as the appointment of an interim receiver, reports in Bulgarian media said.
Currently, CCB is run by administrators appointed last year by the Bulgarian National Bank (BNB), which has come under pressure in recent months for its handling of the situation.
Parliament budget committee chairperson Menda Stoyanova, an MP for Borissov’s party GERB, said on March 12 that the central bank did not exercise sufficient oversight. In an interview with news website Mediapool.bg, Stoyanova said: “For six months, the administrators under BNB oversight have ‘struggled’ to revitalise the bank and we saw the result of that.”
The bill is also expected to include provisions that would give the interim bankruptcy receiver the power to cancel any deals signed by the bank administrators.
BNB decided to strip CCB of its banking licence in November 2014, having put the lender under special supervision in June 2014. Payouts of depositor claims started in December, after the deposit guarantee fund was given a loan of two billion leva from the government to cover the full extent of guaranteed deposits.
Borissov said that at the very least, the fund should recoup 1.5 billion leva during the insolvency proceedings so as to pay back the loan. He said that the lender’s diminishing assets (reportedly, down to 1.8 billion leva as of end-December) put that target at risk.
Insolvency proceedings against the bank began after BNB repealed CCB’s licence, but were suspended after majority shareholder Tsvetan Vassilev (currently in Serbia and facing extradition on embezzlement charges) and an Omani sovereign fund, which had a stake of 30 per cent in the lender, appealed the central bank’s decision.
A three-judge panel of the Supreme Administrative Court (SAC) rejected the lawsuit in January, but that ruling is being appealed, with a five-judge panel set to rule on the matter. SAC chief Georgi Kolev said on March 12 that the appeal would be heard no later than mid-April.
(For full coverage of the CCB situation from The Sofia Globe, click here. Logo and corporate motto of Corporate Commercial Bank – “our clients are dear to us” – from a CCB advert. Screengrab from corpbank.bg)