Bankruptcy and Insolvency Litigation

Overview 

Businesses can experience financial distress suddenly or over time, driven by market shifts, the loss of key customers, supply chain issues, regulatory sanctions, or internal mismanagement. In these moments, the legal framework around insolvency and restructuring becomes critical: it determines who controls the business, how value is preserved or realised, and what creditors ultimately recover.

We support clients across this spectrum. We guide companies and their management through periods of financial difficulty, whether they are exploring restructuring options or already facing formal insolvency proceedings. At the same time, we represent creditors who need to protect and enforce their rights, either within collective insolvency procedures or, where the law allows, through individual actions such as enforcement or litigation outside the insolvency framework.

We have a particularly strong track record in complex, cross‑border insolvency and restructuring disputes. Many of our matters involve multinational groups, international financing structures and foreign insolvency processes with a Bulgarian connection. We are recognised as a market‑leading in cases where the interplay between Bulgarian law and foreign insolvency, restructuring or enforcement regimes is central to the strategy and outcome.

Corporate focus of Bulgarian insolvency law

Bulgarian insolvency procedures traditionally focus on corporate entities and traders rather than individuals. This means that most contentious work in this area is corporate in nature, involving:

• Companies (including subsidiaries of international groups) that have become balance‑sheet insolvent or unable to pay their debts as they fall due.
• Challenges around the timing of the opening of insolvency proceedings, including allegations of delayed filing by management.
• Disputes over transactions entered into before insolvency, including preferences, undervalue transactions and other acts that may be challenged or unwound.

Because of this corporate focus, corporate governance, director responsibilities and shareholder dynamics often feature prominently in Bulgarian insolvency litigation.

Cross‑border insolvency and international bankruptcy implications

In practice, financial distress rarely stops at national borders. We frequently work on matters where:

• A foreign insolvency (e.g. in another EU Member State or a third country) has been opened over a parent company or group entity and the effects need to be recognised or addressed in Bulgaria.
• Bulgarian companies are part of a wider group restructuring, with lenders or office holders seeking to coordinate steps across several jurisdictions.
• Creditors are located abroad but need to assert their rights in Bulgarian insolvency proceedings or through enforcement against Bulgarian assets.

In these cases, issues such as recognition of foreign insolvency proceedings, coordination of parallel actions, and conflicts of law become central. We are experienced in navigating these questions and integrating Bulgarian litigation strategy into a broader cross‑border plan.

Acting for foreign trustees, liquidators and other office holders

Foreign insolvency office holders often need to take action in Bulgaria where the debtor has assets, operations, or counterparties here. We support them by:

• Identifying and securing assets in Bulgaria: tracing and freezing assets, coordinating with bailiffs or other enforcement agents, and applying for protective measures.
• Bringing claims on behalf of the estate: initiating litigation against debtors, directors, former shareholders or counterparties in Bulgaria, including claims to set aside transactions or recover misapplied assets.
• Recognising foreign proceedings and orders: preparing applications and submissions to the Bulgarian courts for recognition of foreign judgments or insolvency‑related decisions, where the applicable regime allows recognition and enforcement.
• Coordinating with foreign counsel: ensuring that actions taken in Bulgaria align with the overall restructuring or liquidation strategy and timelines in the “main” proceedings abroad.

We understand the practical constraints under which office holders operate (tight timelines, information gaps, budget pressures) and structure our advice to be as clear and actionable as possible.

Representing creditors in Bulgarian insolvency proceedings

Creditors – whether financial institutions, suppliers, landlords, bondholders or trade partners – often find insolvency procedures complex and opaque. We help creditors understand the process and participate effectively in order to maximise their recovery prospects. Our work includes:

• Advising on filing and verification of claims: preparing and submitting proofs of claim, advising on documentary requirements, and monitoring the treatment of claims by the insolvency court and office holder.
• Challenging or defending the status of claims: bringing or resisting objections to the admission, amount, security or ranking of claims, and litigating disputes around set‑off, guarantees and group claims.
• Representing secured creditors: explaining how security is treated in Bulgarian insolvency, advising on whether and how enforcement can proceed, and representing secured creditors in disputes over their collateral or priority.
• Participating in creditors’ meetings and committees: advising on voting strategies, representation arrangements and collective decisions, including the appointment or replacement of the insolvency practitioner and approval of key steps in the process.

For creditors, we focus on providing clear, probability‑based assessments of likely outcomes and on designing strategies that justify the cost and effort of participation.

Advising and litigating around reorganisation and restructuring plans

Reorganisation and restructuring plans are central to attempts to rescue businesses or achieve better returns than a simple liquidation. They can, however, be contentious and raise numerous legal and commercial questions. We support:

• Insolvency office holders and debtors: in drafting, negotiating and defending proposed plans, including ensuring compliance with statutory requirements, proper classification of creditors, and appropriate disclosure.
• Creditors and creditors’ committees: in reviewing, challenging, or supporting plans, including scrutinising financial assumptions, treatment of different classes, new money arrangements, and proposed releases or waivers.
• Litigation related to plan approval: representing parties in court proceedings over whether a plan should be confirmed, modified or rejected, including arguments about fairness, discrimination between creditors, and respect for statutory safeguards.

We combine a detailed understanding of the legal test for plan approval with a commercially realistic view of the business’s prospects, stakeholder motivations and alternative scenarios (such as liquidation or asset sales).

Enforcement of security across the capital stack

When a debtor becomes distressed, secured creditors need to decide whether to rely on insolvency distributions or to enforce their security rights directly. The presence of multiple layers of debt (senior, mezzanine, junior, bondholders) further complicates these decisions. We assist by:

• Analysing security packages: reviewing pledges, mortgages, floating charges and other securities to assess enforceability, ranking and practical value.
• Advising on enforcement routes: comparing judicial and out‑of‑court enforcement options, timelines, likely recoveries and interaction with ongoing or anticipated insolvency proceedings.
• Handling disputes over collateral: representing parties in disputes about the scope of security, competing claims over the same assets, and challenges to the validity or perfection of security interests.
• Coordinating enforcement in group and cross‑border settings: where collateral is spread across group companies or jurisdictions, ensuring that enforcement steps are coordinated and do not inadvertently undermine each other.

Our aim is to help secured creditors make informed choices about if and when to enforce, and how to use their position to influence restructuring outcomes.

Inter‑creditor disputes and priority issues

In modern financing structures, multiple creditors with different rights often find themselves competing for limited value in an insolvency or restructuring scenario. Disputes can arise over voting, control, information and, ultimately, who gets paid first. We act in:

• Interpreting inter‑creditor and subordination agreements: advising on who is entitled to enforce, in what order, and on what terms, and litigating these questions where necessary.
• Priority disputes: addressing conflicts between statutory ranking rules and contractual arrangements, including questions around equitable subordination, structural subordination and contractual waterfalls.
• Access to information and decision‑making: helping creditor groups understand their rights to information, consultation and participation in restructuring or enforcement decisions, and enforcing these rights in court if needed.

These disputes often determine which creditors recover and to what extent, so we treat them as strategically central rather than peripheral technicalities.

Supporting Debtors, Management and Stakeholders in Distress

Although the original text focuses on creditors and office holders, we also assist companies and their management teams facing financial distress. Our support typically includes:

• Early‑stage risk assessment: analysing cash‑flow pressures, contingent liabilities and potential triggers for insolvency filings or creditor action.
• Directors’ duties and risk management: advising on directors’ duties in the “twilight zone” before insolvency, including how to balance creditor and shareholder interests and reduce the risk of personal liability.
• Restructuring options: exploring consensual workouts, standstill arrangements, amendments and waivers, and assessing when a formal process may be preferable.
• Preparing for potential insolvency: planning for a possible filing, including document organisation, stakeholder communication strategies and mitigation of avoidable disputes.

Our goal is to give management a clear framework for decision‑making at a time when pressures are high and the margin for error is narrow.

Our approach

We see insolvency and restructuring litigation as part of a larger commercial story, not as an isolated legal process. For that reason, our approach is:

• Strategic: we start by understanding the client’s broader objectives – recovery, control, exit, or protection – and build litigation and procedural steps around those objectives.
• Integrated: we work closely with corporate, finance and regulatory colleagues, as well as foreign counsel, insolvency practitioners and financial advisers, to ensure that actions in one jurisdiction or procedure align with the overall plan.
• Practical: we focus on realistic scenarios, timelines and costs, and we communicate in clear terms so clients can make informed decisions quickly.

Experience in complex and high‑stakes matters

We are accustomed to acting in matters that are:

• Cross‑border, involving multiple legal systems and parallel proceedings.
• High‑value, with significant implications for lenders, investors or group companies.
• Technically complex, involving novel questions of law or intricate capital structures.

Clients turn to us due to our combination of deep knowledge of Bulgarian insolvency law, strong cross‑border experience and a commercial mindset. Whether they are foreign office holders seeking to recover assets, creditors navigating an unfamiliar system, or local stakeholders trying to preserve value in a distressed situation, we provide focused, decisive support tailored to the realities of the case.