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Spasov&Bratanov Lawyers’ Partnership was successful for TUI in litigation on the annulment of transfer of commercial enterprise, aiming to prevent the creditors of the sole owner of the transferor to enforce against its assets. In summary, TUI had commercial claim, honored through a final arbitration award against a debtor, whose main asset was the shares in a subsidiary, solely owned limited liability company. Under Bulgarian law enforcement against shares in such type of company goes through forcible winding up and liquidation, so the creditor to be satisfied from the value of the liquidation quota, i.e. this is the value of the assets left after all other company’s creditor have been paid. To prevent TUI’s enforcement, the debtor transferred the commercial enterprise of its subsidiary to a related party for a price much lower than the balance sheet value of the assets, included in the said enterprise. Our task was to assist by claiming invalidity of the transaction and requesting its deletion of its registration from the Commercial Register. The difficulty in this case came from the indirect link between the claimant and the respondents, being the parties to the disputed transaction – TUI was not their direct creditor but had a claim against a company, which was the sole owner of the first respondent and therefore, a potential creditor of that company in a future liquidation. We were successful in convincing all three court instances reviewing the case that TUI has legitimate interest to challenge the transaction as being contrary to the good morals and thus to be declared invalid because of the opportunity to enforce its claim against the liquidation quota of its debtor. Another curious detail was that the transfer of commercial enterprise of its subsidiary was not the first attempt of the debtor to prevent TUI’s successful enforcement. Before that the debtor transferred its shares in the subsidiary, but this transaction was declared invalid against TUI on the basis of Article 135 of the Bulgarian Obligations and Contracts Act. Partner Boyko Bratanov acted for TUI as a leading lawyer on that matter with the support of the Kremena Yaneva-Ivanova, Senior Associate.

Date: February 2024

Source: Spasov & Bratanov Lawyers’ Partnership

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