Банкеръ Weekly



Only a quarter of the incumbent state bailiffs in Bulgaria have expressed willingness to become self-employed, the BANKER weekly learnt. According to data of the Justice Ministry, at the end of last week only 69 of a total of 253 state-employed bailiffs took advantage of the possibility to become freelance, given to then by the law on self-employed bailiffs, in force as of September 1, 2005. Ten of all the 40 bailiffs, employed at the Sofia Regional Court, have so far applied for that. Their number is expected to go up as the deadline for filing applications is October 4 (next Monday). It is known that the transitional and conclusive provisions of the above-mentioned act stipulate that within a month the operating bailiffs may file an application to the Justice Minister, expressing their willingness to become self-employed. Moreover, they will not have to enter a competition in order to get a certificate of qualification and legal capacity to exercise the profession. However, the competition will be a must for the candidates who formally satisfy the conditions, but who are not currently employed to collect the receivables from unfair debtors. The fact that the self-employed bailiffs will be a minority in comparison to those who will remain on a pay-roll and will be getting their salaries from the budget is both surprising and logical. The privatisation of compulsory execution in Bulgaria was expected with a huge interest in legal and financial circles. The flaws in the model of having only state-employed bailiffs were more than obvious, even for those not so acquainted with the provisions of commercial law. On the other hand, the idea for the introduction of freelance bailiffs was accepted with some reservations by some deputies in the 39th National Assembly (which passed the law on self-employed bailiffs) and within the guild of bailiffs itself. The lack of an unanimous stance among the latter became evident during the public debates for or against the freelance bailiffs in the beginning of 2005. One of the reasons for the not so great enthusiasm among the bailiffs to start their own business similar to their colleagues - the notaries - is the lack of clarity if the new model will be effective in Bulgaria. It's difficult, for instance, to forecast if the creditors having a writ of execution or another document with alike force (for public receivables as well) would prefer that the collection on due money would be undertaken by self-employed bailiffs (an option which the law stipulates). Another big question is if the state authorities will be cooperating with the self-employed bailiffs for the execution of their rights. It's sufficient to point out that at least on paper a freelance bailiff is entitled to access to the court, to the administration offices (taxation services included), to the National Insurance Institution (SII), and to the Central Depository. Another question that remains open is if the operation of self-employed bailiffs will automatically result in an improvement of their efficiency. According to lawyers, there some risks as well in the restriction that freelance bailiffs will be entitled to operate only on the territory of the respective regional court where they have been registered. That could create difficulties when encashing a property of the debtor in another part of the country. According to experts in commercial law, the newly introduced mechanism for compulsory collection of public and private receivables could not function adequately without urgently passing amendments to the Civil Procedure Code. More specifically, this concerns the limitation of the possibility for the debtor to appeal against the evaluation at which the sale begins of the movable and immovable property on which a distrain has been laid. Under the effective regulations, the evaluation is based on market prices and is made by the state- or self-employed bailiff with the help of experts. An additional hindrance to the operation of freelance bailiffs is that the administrative procedures with the law have not been passed yet. These are all the regulations that should be approved by the Justice Ministry By end-February 2006 at the latest. The most important among them is perhaps the one regarding the terms and order for holding the future competitions for self-employed bailiffs. The ordinance will be signed by Justice Minister Georgi Petkanov after consultations with the Chamber of Bailiffs, an institution to be set up at the first general meeting of self-employed bailiffs in Bulgaria. The forum should be invited by Justice Minister by end-November 2005 at the latest and will vote the statutes of the branch organisation, appoint its management board, and set the size of entrance and annual fees, to be paid by the freelance bailiffs. Mr. Petkanov is to sign also another ordinance, expected with interest, regarding the obligatory insurance of self-employed bailiffs. The law, regulating their operation, stipulates that they are insured against the damages that may arise from guilty non-execution of their obligations. The Ministry of Justice and the Bulgarian National Bank (BNB) will set the rules for calculating interests on the so-called special deposits of freelance bailiffs. They will be opened in a credit institution, chosen by the bailiff and the money from the encashment of the debtors' property will be remitted to them. A curious detail is that the interests will be calculated and will go to a different account. The bailiff should also open his own bank deposits for the payment of expenses for the forced actions and the fees, paid by the client. Their specific amount, however, is to be set in a special tariff by the Council of Ministers. According to pundits, one of the debatable moments that hinder the tariff's drafting is if various fees will be introduced for the state- and self-employed bailiffs.Although a minority, the freelance bailiffs will have the chance to repeat the success of their colleagues from the EU in the collection of receivables and prove that the State is not only a bad owner, but is also a bad collector of receivables. The number of applicants for the first competitions in the beginning of next year will probably show if that will become a reality.

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