DEBTORS OF BANKRUPT BANKS TO PAY OFF WITH COMPENSATORY NOTES
The Banks Act will undergo some amendments, but this time they will not concern the operating credit institutions. Even banks declared insolvent will not feel the effect of the new regulations, because they will only refer to their debtors whose assets were acquired by the State Receivables Agency (SRA). The group of these banks includes TSBank, Private Agricultural and Investment Bank, Business Bank, ELITBANK, AGROBUSINESSBANK, and the International Investment and Development Bank. Their assets were transferred to the SRA in 2000 and 2001, because the State was their largest creditor. After these transactions the debtors of these six banks became debtors of the State and its representative, the SRA.The draft amendments to the Banks Act approved by the Council of Ministers on March 31, 2005 stipulate that individuals and companies be allowed to pay off their debts to the SRA in government securities. Of course, not all types of securities will be valid. The debts will be payable in bonds issued in accordance with the ZUNK Act, adopted on December 1993, in compensatory and investment vouchers. It would be logical to ask why this issue is settled by the Banks Act and not by the Tax Procedure Code where most regulations for the collection of state receivables are included. According to the Head of the Bulgarian National Bank Legal Department Dimitar Ananiev, the Government decided to amend the Banks Act, because its 1999 transitional and final regulations arranged the order that allowed the State to acquire assets of bankrupt credit institutions which have it as their largest creditor. As a matter of fact, the mechanism did not work efficiently. In some of the deals the court deprived the state of the chance to get the assets of bankrupt banks without paying for them. That's why the State could not acquire First Private Bank, although the institution owed more than BGN86MN to the Ministry of Finance. The bank's assets were given to Yorset Holding which paid BGN14.8MN for them. The holding borrowed the amount from BULBANK and later paid it off.Other bankrupt banks such as MINERALBANK and Economic Bank paid off their debts to the State, so it failed to take their assets. The assets were acquired by operating private banks - DZI Bank and EIBANK. In turn, the insolvent CAPITALBANK and Balkan Universal Bank (BUB) owed nothing to the state. That's why since going bankrupt they have been run by trustees in bankruptcy appointed by the Deposit Insurance Fund. A month ago BUB was acquired by Tokuda Bank and the Central Cooperative Bank submitted an offer for CAPITALBANK. The draft amendments to the Banks Act will be probably voted by the next parliament. After the adoption the debtors of banks which assets were acquired by the SRA would be allowed to purchase ZUNK bonds and compensatory instruments on the stock exchange and use them to pay off their debts to the receivables agency. That will stimulate the trade with compensatory and investment vouchers and fortunately for their owners will raise their prices. But what is more important is that the State will find another way to indemnify the owners of compensatory instruments.