UBB HAS LIVED TO SEE DYNAMO PLANT BANKRUPT
The Supreme Cassation Court confirmed last week a decision taken by the Bourgas administrative magistrates. By request of United Bulgarian Bank (UBB), in April 2002 the magistrates declared the Sliven-based Dynamo electric motor producer insolvent. The bank claims that the company, owned by AKB Corporation, owes it USD4.7MN.The lawyers of UBB and Dynamo submitted their written defences to the Supreme Cassation Court in mid-September. According to the regulations, the court should make a decision within a month. Not rarely, however, the recommended term is extended to 2, 3 or even more months. These delays are only bad for the creditors. However, in the Dynamo case, the Supreme Cassation Court was as quick as possible. By their ruling the magistrates put an end to the dispute that started in 1998.As soon as Dynamo was acquired by the private corporation, the company managers stopped paying off its debts. They explained that UBB had not claimed its receivables prior the plant's privatisation in 1997, as required by paragraph 6 of the Transformation and Privatisation of State and Municipal Enterprises Act, which was effective till end-March 2002.It turned out, though, that paragraph 6 is not the only problem. AKB Corporation acquired 65% of Dynamo's shares through mass privatisation and the law which regulates this type of transactions does not stipulate that creditors should declare in advance their receivables from state-owned companies, listed for sale. Anyway, UBB sent a letter to the then Mass Privatisation Centre informing it about its financial claims towards Dynamo. Therefore, the managers of the Sliven-based company were aware of the bank's claims and now, five years later, they will have to hand the enterprise over to its creditors.