Category: Bulgaria

Boyanov & Co has advised Eurobank and Alpha Bank – acting directly and through their subsidiaries – on financing Tyrbul’s acquisition of the United Milk Company. The Legal Consultancy reportedly advised Tyrbul.

According to Boyanov & Co, Tyrbul is a subsidiary of Hellenic Dairies, a third-generation family business that operates in the dairy sector in Greece and 47 other countries.

The United Milk Company is a Bulgarian dairy company and was a wholly owned Bulgarian subsidiary of Delta Foods SMSA, a member of the Vivartia Group, that produces and distributes dairy products and fresh fruit juices. 

Delta Foods SMSA had agreed to sell the United Milk Company to Tyrbul back in September (as reported by CEE Legal Matters on September 7, 2022). The sale transaction finally closed in March 2023 (as reported by CEE Legal Matters on March 23, 2023).

The Boyanov & Co team included Partner Damian Simeonov and Senior Associate Georgi Drenski.

Deloitte Legal has successfully represented the Loznitsa Municipality before the Supreme Administrative Court of Bulgaria in a lawsuit against the Managing Authority of Operational Program Environment 2007-2013.

According to Deloitte Legal, the case concerned “appealing a decision of the Managing Authority dated March 8, 2022, for determination of a financial correction in the amount of approximately BGN 1,5 million from the value of the costs under a public procurement contract with a total amount of more than BGN 8 million.”

According to the firm, initially, the Administrative Court of Razgrad ruled in favor of the Loznitsa Municipality, but the Managing Authority filed an appeal before the Supreme Administrative Court. Subsequently, the Supreme Administrative Court confirmed the decision made by the first instance court.

Deloitte Legal’s team included Bulgaria Country Legal Leader Zvezdelina Filova, Senior Associate Konstantin Ivanov, and Associate Georgi Stefanov.

In the beginning of February 2023, amendments to the Civil Procedure Code (“CPC“), dedicated to the digitalization of the order for payment procedure were promulgated. In the motives of the draft law, it is noted that the changes are in line with the tendency in the European Union towards the digitalization of this procedure, as well as with the aim of allocating judicial resources in a more optimal way through the centralized distribution of the order for payment procedures among regional judges across the country. In this way, an attempt is made towards overcoming the uneven workload of the judges from the different regions, respectively towards acceleration of the court proceedings.

The new rules will enter into force on 01.07.2024. The reason for setting such a long transition period – a year and a half, before their entry into force – is primarily due to the need to upgrade the Single Portal for Electronic Justice (“SPEJ“), through which the applications will be submitted electronically and the procedure will develop. Currently, SPEJ is mainly used for electronic access to court cases, and the system also includes other functionalities, such as a connection with the System for issuing electronic criminal record certificates, etc.

The amendments to the CPC introduced the principle position that all actions in the order for payment procedure are carried out in electronic form and all acts of the court in the procedure, including the orders for payment and the writs of execution, are issued in electronic form, except when otherwise provided. In the general case, however, the amendments rather only give the possibility to choose whether to use the electronic order for payment procedure or to proceed in the old-fashioned way – where all actions are carried out on paper.

However, there are some situations, provided with the new rules, where the electronic order for payment procedure becomes mandatory and, accordingly, the “paper” alternative is not possible – these are the cases when an application for the issuance of an order for payment is submitted by:

1. credit and financial institutions, including those collecting receivables against consumers, insurance and reinsurance companies and traders which supply energy, gas or provide postal, electronic communication or water supply and sewerage services, notaries and private bailiffs;
2. state institutions and municipalities

Regardless of the above, with the amendments in the CPC, it is provided that when traders and persons are represented by an attorney-at-law, there is no longer an obligation that the order for payment procedure is in electronic form. In this part, the changes could be subject to two types of interpretation: (i) broad – all traders and persons, including the above-listed traders and persons under items 1 and 2, when represented by an attorney-at-law, may choose whether to submit an application in electronic form or on paper, and (ii) strict – all traders and persons, but with the exception of the above-listed traders and persons under items 1 and 2, when they are represented by an attorney-at-law, may choose whether to submit an application in electronic form or on paper. Under the strict interpretation, the above-listed traders and persons under items 1 and 2, regardless of whether they are represented by an attorney-at-law or not, will be obliged to submit only electronic applications for the issuance of an order for payment. Given the scope for interpretation that this rule creates, it can be expected that it will undergo changes.

When the electronic form is preferred, the respective person submits an application for the issuance of an order for payment through an electronic form, available in SPEJ. The submitted applications are distributed centrally on the principle of random selection among all regional judges in the country, and not, as it is currently – the applications to be reviewed in the general case by the regional court at the debtor’s permanent address or registered office. An exception to this rule is provided only in relation to applications for issuing of orders for payment based on certain types of documents under Art. 417, para. 1, items 3, 6 and 10 of the CPC (notary deeds and other contracts with notarization of signatures, mortgage deeds and pledge contracts, promissory notes, bills of exchange and the like). In these cases, the submitted applications are reviewed by the regional court at the applicant’s current address or registered office.

Once the debtor receives the order for payment, he can file an objection against it in any regional court in writing on paper or in electronic form through SPEJ.

Although the order for payment procedure is in principle intended to proceed entirely electronically, when initiated in an electronic form, some actions – for example actions on appeals of acts within the order for payment procedure; the claim for establishment of the existence of the receivables, etc., will be able to be carried out on paper as well.

In conclusion, the digitalization of the order for payment procedure in Bulgaria should be positively evaluated in view of the aims it pursues. Given the long transition period that is provided before the amendments in the CPC enter into force, there is a probability that some of the new rules in relation to the digitalization of the order for payment procedure will undergo changes over time.

By Konstantin Mladenov, Associate, Eversheds Sutherland

On February 21, 2023, CEE Legal Matters reported that Tokushev & Partners had assisted MFG Ins in obtaining an insurance license from the Financial Supervision Commission of Bulgaria. CEELM reached out to Tokushev & Partners Partner Ivan Antov to learn more about the matter.

CEELM: At what stage did the Tokushev & Partners team become involved in this project?

Antov: The Tokushev & Partners Law Office supported Management Financial Group’s (MFG) efforts to obtain an insurance license from the start of the process to its successful conclusion. The process of obtaining an insurer’s license is long and complex and it took us approximately ten months to complete it. We are satisfied that our team’s efforts have been rewarded and that we achieved something that had not happened in the Bulgarian market for almost ten years.

CEELM: And what precisely was your office’s mandate? How was the work split between you and the Musseva & Ivanov team?

Antov: Tokushev & Partners was selected as the leading legal advisor for the licensing proceedings, the main reason for which was our previous expertise in insurance consulting, as well as my personal experience gained at the Financial Supervision Commission. We were involved not only in the legal work itself – related to the drafting of the numerous required internal documents – but also to some extent in project management, assisting the client in the selection of members for the insurer’s board and actuary, and advising on the structuring of its operations. We are grateful for the excellent interaction with our colleague Alexander Ivanov, Co-Owner of the Musseva & Ivanov Attorney Partnership, a leading expert in the regulation of non-bank financial institutions, who communicated with the client – with whom he has a long-standing relationship – and substantially contributed with his compliance experience to the preparation of some of the required documents.

CEELM: And for the Tokushev & Partners’ team side – who took the lead on what aspects of the work?

Antov: As I mentioned before, my experience working in the Bulgarian regulator, even though many years ago, helped me to structure the project and take on the position of a team leader. In this particular work, I received outstanding support from my colleagues, Partner Boris Teknedzhiev, Associate Margarita Mitkova, and, especially, our former Senior Associate Bogdan Karadzhov (who has since moved in-house). We formed a team with different approaches and different energies, but of people who share the same values, the same vision, and the same attitude towards our clients and business. I can confidently say that, without their efforts, the successful implementation of the project would not have been a fact.

CEELM: What would you say was the most complex aspect of the matter?

Antov: The work went smoothly thanks to the good expertise and internal organization of our client, the Management Financial Group. Their previous experience in the field of non-bank financial institutions was also the biggest challenge for us, because we had to modify it according to the specifics of the insurance regulation. Obviously, we were able to cope with this challenge and today we can congratulate ourselves on the successful completion of the procedure.

CEELM: By contrast, what do you believe ran particularly smoothly?

Antov: I believe that our cooperation with Alexander Ivanov was very beneficial, insofar as we were able to combine his previous experience and knowledge of the client’s specifics with our in-depth understanding of the insurance sector. I also cannot hide my satisfaction with the team of MFG Ins that we helped to put together. With this team, I believe that MFG Ins will achieve the goals it has set for itself.

Djingov Gouginski Kyutchukov & Velichkov has advised the European Innovation Council on leading a EUR 2.5 million investment round in Transmetrics. Dinova Rusev & Partners reportedly advised Transmetrics.

According to DGKV, “existing shareholders and angel investors joined the EIC Fund in underwriting Transmetrics’s growth ambitions ahead of a planned Series A round.”

Transmetrics is an AI platform whose software is designed to deal with inefficiencies in the logistics sector, such as freight vehicles running half-empty, by facilitating higher fleet utilization rates and lower transport-related expenses and carbon emissions. 

“In charge of a dedicated budget of EUR 10.1 billion, the EIC is the EU’s preeminent program with funding opportunities for breakthrough technologies and game-changing innovations,” DGKV informed. “The EIC Fund manages investments of up to EUR 15 million per recipient in the form of patient capital provided to competitively selected SMEs and start-ups for scale-up and other relevant costs.”

According to the firm, the “EIC funding will enable Transmetrics to further improve its technology, boost its client portfolio of logistics service providers, and contribute to sustainability and efficiency in the industry.”

DGKV’s team included Partner Valentin Bojilov and Associate Zhanet Miteva.

Gugushev & Partners has advised Alfastar Ventures on the registration of a Bulgarian EuVECA alternative investment funds manager.

“The alternative investment funds manager specializes in early-stage venture capital investment, without having a termination date,” Gugushev & Partners informed. “The above registration is a significant milestone that is expected to bolster the growing start-up ecosystem in Bulgaria and the region.”

“The first evergreen EuVECA fund in the country follows EU Regulation №345/2013,” the firm reported. “EuVECA funds can invest in unlisted companies with up to 499 employees and small and medium enterprises listed on an SME growth market. A significant advantage of the EuVECA label is that it enables managers to market their EuVECA funds not only to professional investors but also to high-net-worth individuals investing a minimum of EUR 100,000,” while also making cross-border investment more accessible.

The Gugushev & Partners team was led by Senior Partners Victor Gugushev and Dimitrinka Metodieva and included Partner Daniela Petkova and Senior Associate Sevdelina Rabuhchieva.

On March 23, 2023, Tabakov, Tabakova and Partners announced that Delta Foods’ sale of the United Milk Company in Bulgaria to Tyrbul (reported by CEE Legal Matters on September 7, 2022) had closed.

As previously reported, Delta Foods SMSA sold its wholly-owned Bulgarian subsidiary United Milk Company EAD to Hellenic Dairies subsidiary Tyrbul EAD. Bernitsas and Tabakov, Tabakova and Partners advised Delta Foods. Deloitte Legal advised the buyer.

Delta Foods SMSA is a member of the Vivartia Group and produces and distributes dairy products and fresh fruit juices.

According to Deloitte Legal, “Hellenic Dairies is a multinational holding performing activities related to milk and dairy products production and distribution, owning several production plants in Greece and the Balkans, and commercial subsidiaries abroad […] United Milk Company EAD is one of the largest milk and dairy production companies in Bulgaria. UMC has 50 years of milk processing experience. They produce a wide range of products from cow, sheep, and goat milk.” Tyrbul is a wholly owned subsidiary of Greek dairy company Hellenic Dairies.

The Tabakov, Tabakova and Partners team included Partner Todor Tabakov and Senior Associate Vasil Ruykov.

Bernitsas’ team included Partner Nikos Papachristopoulos and Senior Associate Sofia Kontou.

Deloitte Legal’s team included Country Legal Leader Zvezdelina Filova, Legal Managers Miglena Micheva and Kaloyan Yordanov, and Associates Kristian Nemtsov and Georgi Stefanov.

Djingov Gouginski Kyutchukov & Velichkov has advised Bianor Holding on its acquisition of the Itido Technologies and Databreathe software companies in Bulgaria.

The transaction remains contingent on regulatory approval.

Bianor Holding, listed on the Bulgarian Stock Exchange, is active in the US, the EU, and Bulgarian markets providing video streaming technology services and software solutions for the defense industry.

Itido specializes in web and mobile software products. Databreathe specializes in machine learning and AI.

The DGKV team included Partners Gergana Monovska and Georgi Tzvetkov and Senior Associate Vlada Tsenova.

DGKV was unable to disclose further information on the deal.

CMS Sofia has successfully represented Xylem in settling a dispute with a Bulgarian hydropower producer before the ICC International Court of Arbitration.

Xylem is a Washington-headquartered water technology company.

“The parties to the dispute have previously entered into a supply contract for the delivery of hydropower generators for the rehabilitation of two hydropower plants in Bulgaria,” CMS informed. “Later, both parties claimed alleged breaches of the supply contract, leading to the filing of monetary claims and counterclaims for compensation before the ICC International Court of Arbitration.”

“The commencement of the arbitration in December 2021 and the case management conference held in June 2022 were followed by seven-month-long negotiations between the parties,” the firm reported. “The ICC International Court of Arbitration, in the face of the appointed Sole Arbitrator, supported both parties in their aim to reach a settlement and granted a temporary suspension of the proceedings while the negotiations lasted.”

According to CMS, “the whole negotiation process looked a lot more like mediation, although formally a third-party mediator was not appointed […] The parties ultimately found common ground for an amicable resolution of the dispute and even entered new business opportunities together. In our view, this was the best possible outcome for the parties from both a commercial and legal point of view.”

The CMS team was led by Partner Assen Georgiev and included Associate Yana Antonova and Junior Associate Ivan Petrov.

Djingov Gouginski Kyutchukov & Velichkov has advised lender DSK Bank on the EUR 4 million and BGN 3.5 million term facilities agreement with Terra Tour Service for the rebranding of some of its hotels to Hyatt brands.

According to DGKV, Terra Tour Service is one of the largest hotel developers and owners in Bulgaria.

The DGKV team was led by Partner Georgi Tzvetkov and Senior Associate Deyan Bogdanov and included Associates Stephan Solachki and Nikolay Kaymakanov.