Stabilization Proceedings – Second Chance For Companies With Financial Difficulties – New Rules Effective From 01.07.2017

With the latest changes in the Commerce Act, promulgated on December 2016, a complete new company stabilization proceeding was created. It is regulated in the amended Fifth part of the Act. The aforementioned amendment, together with the other changes in the Act, are a result of the tendencies at transnational level within the European Union, which have been prevailing in the last years, for creating minimum standards for security and guaranteeing the citizens’ rights and the opportunities for investments. Various European acts emphasise the need for guarantees for restructuring of companies with financial difficulties, in order to prevent the risk of becoming insolvent and to lead to maximum benefit for the companies and their creditors and employees. Also the importance of the national legislation for facilitating the process of reduction of the debt ratio of the companies and the importance of  improving the companies’ restricting mechanisms are taken into account.

Generally, the main idea of the stabilization proceedings is to create a possibility for achieving a settlement between the company with financial difficulties and its creditors about the fulfillment of the companу’s obligations, which can lead to opportunity for continuation of its activity. As a result, the rights of the debtor are guaranteed, the satisfaction of the creditors is ensured and also the investments are stimulated, because of the wider range of security guarantees.

The newly created legislation regulates the procedure for instituting, conducting and terminating the stabilization proceedings. It also indicates the participants in the proceedings and their rights and obligations. The characteristics of the stabilization plan, the prerequisites, procedures and rules for its discussion and acceptance and also its action and consequences are described in detail. The legal bodies which have the authority to ensure the legality and efficiecy of the stabilization proceedings are also indicated.

You may find further information on the topic in the article „Stabilisation Proceedings – second chance for companies with financial dificuties” on our website. We also invite you to refer your questions to attorney Desislava Cvetkova,  head of the “Judicial Debt Collection and Bankruptcy” Department of Popov and Partners Law Office, on e-mail address: