I. Grounds for Dissolution
A Bulgarian commercial company may be dissolved on a number of grounds set out in Article 155 of the Commercial Act (for an OOD (Ltd.) / EOOD (Sole Ltd.)) and Article 252 (for an AD (JSc.) / EAD (Sole JSc.)). The most common grounds in practice are: a resolution of the General Meeting (or, in the case of an EOOD (Sole Ltd.) or EAD (Sole JSc.), a unilateral decision of the sole owner) to dissolve the company; the expiry of the period for which the company was incorporated, where a fixed term was specified in the founding document; the achievement or permanent impossibility of the company's stated purpose; and a court order dissolving the company on the application of the prosecution authority or an interested person where the company has failed to comply with statutory requirements.
The voluntary dissolution resolution — the most common route — must be adopted by a qualified majority of three-quarters of all registered capital in the case of an OOD (Ltd.), and by a qualified majority of three-quarters of the capital represented at a duly convened General Meeting in the case of an AD (JSc.). The resolution must be recorded in writing and submitted to the Commercial Register within seven days of adoption, together with an application for the entry of the dissolution decision and the appointment of a liquidator.
II. Appointment of the Liquidator
Upon dissolution, the company enters liquidation and a liquidator (ликвидатор) is appointed to conduct the winding-up process. The liquidator is typically the existing manager of the company, though any natural person with full legal capacity may be appointed. The liquidator's appointment must be registered in the Commercial Register, and the company's designation is amended to include the suffix "в ликвидация" (in liquidation) after the company name.
The liquidator assumes all management functions of the company during the liquidation period, with the specific mandate of realising the company's assets, paying its creditors, and distributing the surplus. The liquidator has both the power and the duty to conclude only those transactions that are necessary for the purposes of the liquidation — the company may not commence new business activities after the dissolution decision. The liquidator is personally liable to the company's creditors for any loss caused by a culpable failure to observe the liquidation procedure, including any premature distribution of assets before all creditors have been satisfied.
III. Creditor Notification and the Six-Month Period
One of the most important and time-consuming steps in the liquidation procedure is the notification of the company's creditors. The liquidator is required by Article 158 of the Commercial Act to publish a notice of dissolution in the Commercial Register, inviting creditors to present their claims within six months of the date of publication. This six-month period is a mandatory minimum; the liquidator may not distribute the company's assets to its members until the period has expired and all presented creditor claims have been settled or adequately secured.
The purpose of the six-month waiting period is to afford all creditors — including those who may be unaware of the dissolution — a reasonable opportunity to assert their claims before the company's assets are distributed. A liquidator who distributes assets before the expiry of this period, or before known creditor claims have been satisfied, exposes himself to personal liability for the resulting loss to creditors.
IV. Realisation of Assets and Payment of Creditors
During the liquidation period, the liquidator takes an inventory of the company's assets, collects outstanding receivables, terminates ongoing contracts (subject to applicable notice periods and early termination obligations), and realises the company's assets — whether by sale, transfer in kind, or other means — at the best available price. The proceeds of realisation are applied first to the costs of the liquidation itself (including the liquidator's remuneration and professional fees), then to the satisfaction of the company's creditors in the order of their priority.
Secured creditors — holders of registered mortgages or pledges over the company's assets — are entitled to be satisfied from the proceeds of the secured assets in priority to all other creditors. Unsecured creditors rank equally among themselves and are satisfied pro rata from the remaining assets after the secured creditors have been paid. Where the company's assets are insufficient to satisfy all unsecured creditors in full, the liquidator must apportion the available assets proportionately and any outstanding balance is written off upon deregistration — a result that, if caused by insolvency rather than merely insufficient assets, should properly be addressed through insolvency proceedings rather than voluntary liquidation.
V. Final Account and Distribution of Surplus
Upon the satisfaction or securing of all creditor claims and the expiry of the six-month notification period, the liquidator prepares a final liquidation account (заключителен ликвидационен баланс) and a distribution plan setting out the liquidation surplus available for distribution among the members. The final account must be approved by the General Meeting (or the sole owner) before distribution may proceed.
The liquidation surplus is distributed among the members in proportion to their nominal interests in the registered capital, unless the founding document provides for a different allocation — for example, a preferential distribution in favour of certain members. In an OOD (Ltd.) or EOOD (Sole Ltd.), the distribution is typically effected by bank transfer; in an AD (JSc.), it is effected through the company's registrar or depositary. Any assets that cannot be converted to cash — for example, real property — may be distributed in kind, provided all members consent.
VI. Deregistration
Following the distribution of the liquidation surplus, the liquidator applies to the Registry Agency for the deletion of the company from the Commercial Register. The application must be accompanied by the final liquidation account, evidence of the approval of the account by the members, a declaration by the liquidator that all creditor claims have been satisfied or secured and that the liquidation surplus has been distributed, and a tax clearance certificate from the National Revenue Agency confirming that the company has no outstanding tax liabilities.
Upon approval of the deletion application, the company is struck from the Commercial Register and ceases to exist as a legal person. Any assets that were inadvertently omitted from the liquidation and discovered after deregistration are distributed among the former members by a court-appointed liquidator in a supplementary liquidation proceeding — a cumbersome and costly procedure that underscores the importance of conducting a thorough asset inventory before the final distribution is made.
VII. Liquidation vs. Insolvency Proceedings
It is important to distinguish voluntary liquidation from insolvency proceedings. Voluntary liquidation is the appropriate procedure where the company is solvent — that is, where its assets are sufficient to cover all its liabilities — and the owners simply wish to bring the company's activities to an end. Where the company is insolvent — unable to meet its due and payable obligations — the manager is obliged to file for insolvency proceedings under Part Four of the Commercial Act within thirty days of the onset of insolvency, and a voluntary liquidation commenced in the knowledge of insolvency may be challenged as an improper procedure designed to circumvent the statutory creditor protection rules applicable in insolvency.