Sofia City Court ruled on April 22 to declare Corporate Commercial Bank (CCB) insolvent on the day that it lost its banking licence, November 6 2014. The ruling can be appealed – either by the prosecutor’s office or the central bank – but that would not suspend the insolvency ruling for the duration of the appeal.
By setting the insolvency date on November 6 2014, the court effectively prevented any legal challenges to accounting offsets carried out prior to that date, specialist judiciary news website Legalworld.bg reported. The Bulgarian National Bank had previously asked the court to set the insolvency date on September 30 2014, when CCB administrators wrote down about 4.2 billion leva worth of impaired assets held by the lender.
The immediate impact of the ruling is that the state deposit guarantee fund, which is CCB’s largest creditor after it took on repayment of guaranteed deposits of up to 100 000 euro (or about 196 000 leva), will be able to appoint permanent bankruptcy receivers, replacing the interim receivers that took over the bank’s management last month.
Over the next two months, CCB’s creditors will be able 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 reported.
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 write-down 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: Jason Morisson/sxc.hu)