Bulgaria’s Parliament passed at second reading on March 18 the bill of amendments to the Bank Insolvency Act, which envision the appointment of a temporary bankruptcy receiver if a lender has had its licence stripped but no insolvency proceedings are ongoing.
The bill was prompted by the ongoing saga concerning the Corporate Commercial Bank (CCB), which was Bulgaria’s fourth-largest lender when it asked to be put under the supervision of the Bulgarian National Bank (BNB) in June 2014.
Following an audit report that recommended writing down about 4.2 billion leva of impaired assets, CCB lost its licence in November 2014, but insolvency proceedings at Sofia City Court were suspended later that month when the bank’s two largest shareholders appealed the licence loss at the Supreme Administrative Court.
Last week, Prime Minister Boiko Borissov asked Parliament to fast-track the proposed bill, which received the support of all parliamentary-represented parties, including those in opposition. Borissov said that under the conservatorship of BNB-appointed administrators, CCB was quickly losing its assets, and made not-so-subtle accusations that the administrators could be complicit to the “plundering” of the bank.
Under the amended law, the courts will be required to appoint the interim bankruptcy receiver put forth by the state deposit guarantee fund, as long as the nominee meets the legal pre-requisites for the position. It was expected that such a receiver for CCB could be appointed as early as next week, Bulgarian media reports said.
The bankruptcy receiver will take over the bank’s management from the BNB-appointed administrators, which could lead to a number of lawsuits being filed to overturn earlier decisions made by administrators regarding CCB’s assets, Bulgarian media claimed.
The deposit guarantee fund is CCB’s largest creditor after starting payout of depositor claims worth 3.6 billion leva in December 2014. The fund had to borrow two billion leva from the government to settle the depositor claims and, according to Borissov, needs to recoup a minimum of 1.5 billion leva from CCB to pay back the loan.
(For full coverage of the CCB situation from The Sofia Globe, click here.)