The MoF urgently wrote a draft law because of the case with KTB

The MoF urgently wrote a draft law because of the case with KTB
The MoF urgently wrote a draft law because of the case with KTB

The Ministry of Finance has urgently drafted a bill that will fix cases like those of the International Bank for Trade and Development and KTB that went bankrupt in 2005 and 2014, respectively. Shareholders will be able to appeal the revocation of a bank’s license in the Houses, according to a draft amendment to the Bankruptcy Law.

Two days ago, the European Court of Human Rights ruled that the shareholders of KTB, the main one of whom was Tsvetan Vasilev, were deprived of the right to appeal the revocation of the bank’s license. Strasbourg identified a problem with the legislation under which the license was revoked. By law, in such cases, the BNB is obliged to appoint conservators who act on behalf of the bank. I.e. the bank’s shareholders and management lose control over the institution’s actions. Thus, it turns out that if there is a judicial appeal for the revoked license, it is conducted by the quaestors, in other words, by the same institution that revoked the work permit.

After the license was revoked in 2014, KTB shareholders tried to appeal. However, the Supreme Administrative Court decided that they had no legal interest. One of the arguments in this direction is that they no longer formally represent the affected bank. Thus, the shareholders were only a third party to the case.

The ECtHR decision states that the Bulgarian legislation did not provide for any other forms of judicial appeal or other protection in such cases.
The problem also came to light in 2016, when Bulgaria was again condemned in Strasbourg for the same case, but this time by the shareholders of the International Bank for Trade and Development (IBTR), which went bankrupt in 2005. It is this case that stands out as the MoF’s main motive for the draft law, which, however, was published a day after the decision on the KTB case.

“The aim of the bill is to implement the decision of the ECtHR in the case “MBTR v. Bulgaria” and guarantee the right of defense of a credit institution in bankruptcy proceedings, by providing a statutory option for the shareholders and the persons who represented the bank on the date of the decision of the BNB for revoking its license to carry out banking activities or before the appointment of conservators, to enter into the proceedings for consideration of the BNB’s request and to appeal the court’s decision to open bankruptcy proceedings”. states the Ministry of Finance in its reasons. However, there is currently no parliament to pass the bill.

An additional change is also proposed in the texts – cancellation of the possibility of the Minister of Finance to propose to the Bank Deposit Guarantee Fund to release the receiver of a bank in bankruptcy, when the receiver does not fulfill his obligations or his actions endanger the interests of creditors. This authority of the Minister of Finance was written into the law in 2015, but according to the Ministry of Finance, it is not sufficiently secured because the Minister does not have a mechanism to monitor how the syndic performs its duties.

The article is in Bulgarian

Tags: MoF urgently wrote draft law case KTB

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