"Bulgaria transposed the Restructuring Directive's prohibition to terminate contracts via ipso facto clauses, but also (deviating from the Directive) prohibited contractual set-off in restructuring, thus rendering the preservation of many contracts performed via contractual set-off / netting of payment meaningless. So, in drafting ipso facto clauses the impossibility to perform contracts in restructuring, due to the contractual set-off prohibition, may be utilised as an additional trigger for termination, now".

The Supreme Court confirmed parties' freedom to contractually modify any of the prerequisites for set-off under Bulgarian law, thus permitting various quasi-security arrangements in commercial and financial contracts that creditors may avail themselves of.

Prerequisites for statutory set-off in Bulgaria

So far, the Bulgarian economy has encountered various COVID-19-related effects, but a surge in insolvencies is not yet one of them. Although the Bulgarian state was slow in implementing measures to help companies affected by the pandemic – which measures turned out to be insufficient – there has been no visible increase in bankruptcy proceedings since 2020.

Editorial | Restructuring Directive  

On July 6-7, 2017, Craig Jalbert, in his capacity as Trustee for F2 Liquidating Trust, filed approximately 187 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 547, 548 and 550 of the Bankruptcy Code (depending on the nature of the claims). In certain instances, the Trustee also seeks to disallow claims of such defendants under Sections 502(d) and (j) of the Bankruptcy Code.

On June 15, 2017, Curtis R. Smith, as Liquidating Trustee of the Hastings Creditors’ Liquidating Trust, filed approximately 69 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 547, 548 and 550 of the Bankruptcy Code. The Liquidating Trustee also seeks to disallow claims of such defendants under Sections 502(d) and (j) of the Bankruptcy Code.

On June 13, 2017, The Original Soupman, Inc. and its affiliates (collectively “Debtors” or “Original Soupman”) commenced voluntary bankruptcy proceedings under Chapter 11 of the Bankruptcy Code. According to its petition, Original Soupman estimates that its assets are between $1 million and $10 million, and its liabilities are between $10 million and $50 million.

On May 17, 2017, GulfMark Offshore, Inc. (“GulfMark” or “Debtor”) filed a voluntary petition for bankruptcy relief under chapter 11 of the Bankruptcy Code in the United States District Court for the District of Delaware.

Starting on April 28, 2017, Craig R. Jalbert, as Distribution Trustee of the Corinthian Distribution Trust, filed approximately 122 complaints seeking the avoidance and recovery of allegedly preferential and/or fraudulent transfers under Sections 547, 548, 549 and and 550 of the Bankruptcy Code (depending upon the nature of the underlying transactions). The Distribution Trustee also seeks to disallow claims of such defendants under Sections 502(d) and (j) of the Bankruptcy Code.

Whether a claim against company management is direct or derivative is not infrequently disputed in litigation before the Delaware Court of Chancery. This determination becomes important in many contexts, including whether it was necessary for plaintiff to make a pre-suit demand upon the board, whether derivative claims of a company have been assigned to a receiver, or whether such claims have previously been settled in a prior litigation.