Archive for February, 2017

Bulgaria’s exclusion of certain bank deposits from the deposits guarantee breaches an EU Directive

Friday, February 24th, 2017

In this article BOYANOV & Co. presents a critical analysis of Bulgarian legislation governing bank deposits guarantee excluding from the guarantee deposits solely because they had a higher interest rate than the standard one provided by the bank.

The article was written by Damian Simeonov, Partner and Co-Head of BOYANOV & Co.’s Banking and Finance Practice Group.

Download the full text of the article

BOYANOV & Co. is a Top Trademark Firm in 2017 Rankings of the World Trademark Review 1000 and IP Stars

Tuesday, February 21st, 2017

BOYANOV & Co. has received the top Gold Band and Tier 1 rankings for leading trademark firms in the newly published listings of the two most reputable legal directories for IP practitioners: World Trademark Review 1000 and IP Stars.

In its 7th edition released in 2017 the WTR 1000, which traditionally recommends only the best of the trademark scene, shines a spotlight on the firms and individuals that are deemed outstanding in the IP area from over 70 key jurisdictions worldwide.

In a country, like Bulgaria, where practical reinforcement of IP rights remains a challenge, BOYANOV & Co. has deserved praises for its “leading reputation”, thanks to its “superb knowledge of the law”. The IP team of BOYANOV & Co. is further recognized as “very responsive, hands-on and committed to getting the best results for clients”.

Based on pertinent comments from clients and competitors, WTR 1000 individually appraised the strengths and merits of several IP practitioners from the firm, among which: the WTR 1000 neophyte Marina Mollova, who took the lead in representing Metro-Goldwyn-Mayer Studios in a significant opposition proceeding before the BPO; Stela Sabeva who is “particularly skilled in handling international clients and explaining court processes that are hard to understand as a foreign lawyer. Her English is on a par with that of any native speaker”; Assisting LVMH Group on customs seizures of counterfeit perfumes and watches, Kina Chuturkova is a “strong litigator who considers all angles of a matter and then provides robust advice”; and Natasha Andreeva “truly understands the legal process. She has excellent contacts and always knows who to call. She is very experienced when it comes to technicalities”.

The well-respected publisher in IP industry, the IP Stars handbook of the Managing Intellectual Property, that has been researching IP firms since 1996 and Bulgaria, for a first-time this year, has awarded BOYANOV & Co. the prestigious Tier 1, following an extensive six-month research.

IP Stars Tier 1 17 logo

Creditors secured by a special pledge can no longer enforce their pledge after the opening of insolvency proceedings of the pledgor

Friday, February 17th, 2017

At the end of 2016 the rules on the most widely used type of pledge in Bulgaria (the so called “special pledge”, i.e. a pledge where the pledged assets remain in the possession of the pledgor) were changed. One of the changes restricts the possibility of the secured creditor to sell the pledged assets in a private enforcement sale.

Prior to the amendments the secured creditor was able to privately sell the pledged assets even after the opening of insolvency proceedings of the pledgor, regardless of whether the secured creditor had commenced the enforcement before that. After the amendments the secured creditor is no longer able to sell privately the pledged assets after the opening of insolvency proceedings of the pledgor, if the private sale did not start prior to the opening of the insolvency proceedings.

This reduces the flexibility of secured creditors to sell privately the pledged assets even after insolvency proceedings of the pledgor have been opened. Secured creditors should therefore commence private enforcement as soon as an insolvency petition against the pledgor is filed to be able to keep this option open for them. Hence, secured creditors should put in place a mechanism to follow regularly for insolvency petitions against their pledgers.

Pledge enforcement now requires an insurance, which makes it more costly

Friday, February 17th, 2017

One of the amendments brought at the end of 2016 to the regime of ”special pledges” (i.e. commercial pledges where the pledged assets remains in the possession of the pledger) is the new requirement for insurance.

In particular, a creditor secured by a special pledge enforcing the pledge must, among other things, appoint a “depository”. The depository must be a lawyer or an auditor (prior to the amendments the depository had to be an accountant).

In short, the role of the depository is to prepare a list of the creditors secured by a pledge over the same property and their ranking, receive the cash proceeds from the enforcement of the pledge and distribute such cash proceeds among the secured creditors based on the list. The depository does not carry out the enforcement sale. The later is carried out by the secured creditor.

A new requirement that did not exist prior to the end of 2016 is that the depository must have insurance covering any damages he can cause with his activity at an amount not less than the enforced amount.

This new requirement for insurance raises few concerns:

First, the amendment law did not provide for any transitional period before this new requirement enters into force. Hence, it entered into force almost immediately at the end of last year. Insurers in Bulgaria have not yet prepared themselves to issue these new types of insurance policies. The law is not clear whether a specific insurance policy is required for each specific pledge enforcement or whether for example a general professional indemnity insurance policy would suffice. So, at present no lawyer or auditor has yet such a special insurance cover and unless the general professional indemnity insurances of lawyers or auditors are also deemed to suffice for the purposes of the law there is no one who can currently take on the role of a depository in pledge enforcement.

Second, prior to the amendments the special pledge was appealing to both creditors and debtors because it was relatively inexpensive to create and enforce (in case of private enforcement). The amendment introduced in practice a new enforcement cost as depositories would pass on the cost of obtaining this new special insurance cover to the secured creditor who will in turn pass on the cost to the pledger. Since the cost of obtaining such special insurance cover will depend on the amount of the insurance coverage, which in turn will depend on the amount for which the pledge enforcement is made, the cost of the insurance is likely to be material. This means that one of the main benefits of the special pledge – that enforcing it was relatively inexpensive, is now gone.

Given that the role of the depository is quite limited – to prepare a list of the creditors secured by a special pledge over the same property and their ranking (if more than one) based on public records, to receive the cash proceeds from the pledge enforcement and distribute them among the creditors in the list and that the list prepared by the depository is subject to judicial control (i.e. if a creditor is not content with the list he is entitled to appeal it in court), the potential damages that a depository might cause seem quite limited in practice to merit such an insurance.

In conclusion, from a general public interest point of view, on balance the overall disadvantages of the new requirement for insurance overweigh the benefit of it.